Democrats win US Senate elections in Georgia - 7.1.2021

The US dollar index went down on Wednesday, but started to rise slightly this morning. The index is currently being traded below the significant level of 90 points. Two Democratic candidates won the Georgia Senate election yesterday. Now it will be much easier for the new US president Joe Biden (also a Democrat representative) to implement his reforms after taking office on January 20. However, investors' views have now changed, and they now believe that the US democratic authorities will, in any case, increase foreign debt to stimulate the US economy. This may turn out to be a negative factor for the dollar rate, but it may raise US government bond yields and support stock prices. The Democrats' planned increase in corporate taxes was put on a back burner. So far, the protests by the former US President Donald Trump's supporters in Washington have not had any impact on the financial markets. Today the US will publish data on unemployment for the week and trade balance for November.  Three directors of Fed regional offices are also expected to speak. The forecasts are moderately negative. The EU will publish inflation for December.

On Tuesday, the Dow Jones and S&P 500 stock indexes rallied for the second day in a row, while the Nasdaq dropped slightly. Investors decided that the Democrats' victory in the US Senate elections in Georgia was still positive for the stock market. They hope that the increase in economic stimulus will outweigh the negative impact of higher corporate taxes. Yesterday's US economic statistics were neutral. Industrial orders rose and business activity in the services sector (Markit Services PMI) declined. Labor market figures from the independent agency ADP were unexpectedly much worse than the preliminary forecasts. Investors ignored them in anticipation of the publication of the official Non-Farm Payrolls report tomorrow, January 8. This morning, there has been a steady increase in futures on US stock indices. European exchanges are also experiencing price gains. FTSE 100 (+3.5%) is leading the growth. It has grown by 6% since the beginning of 2021, thanks to the successful Brexit.

World oil prices are rising today for the third day in a row. This is facilitated by the worsening of tensions in the Persian Gulf, the reduction in Saudi Arabian oil production and thus of the OPEC+ production in total. In addition, according to the US Energy Information Administration, oil reserves in the United States fell by 8 million barrels over the week. This is much more than expected. Another negative factor was the Democrats' victory in the Senate. Investors fear that the fiscal policy of new President Joe Biden will lead to a reduction in US oil production.