Waiting on stimulus breakthrough

Wall Street opened a little lower on Thursday as we await the FDA’s decision on the Pfizer vaccine and US lawmakers push ahead with stimulus talks.

Following statements earlier this week, the decision to grant emergency use authorisation to the Pfizer/BioNTech vaccine looks a foregone conclusion and once it comes, any upside for the market may be relatively brief. The risks are firmly to the downside, especially as the UK and Canadian authorities have already signed off, but the odds of any issues are very slim.

The stimulus talks are far from a foregone conclusion. Both sides appear to be getting closer on what it will contain and more sacrifices from both will likely be needed in order to get a slimmed-down version through before the end of the year and avoid a cliff-edge scenario. Will a fiscal deal be reached in time for Christmas? That would without doubt be a huge Christmas gift for the American public. The US is groaning under the weight of the Covid pandemic, which is running rampant in many parts of the country. However, politics is again getting in the way, as Democrats and Republicans continue to square off over a massive recovery package. Talks are continuing, and the latest proposal, a USD908 billion plan, was put on the table by a bi-partisan group of lawmakers.

US lawmakers have bought themselves another week in their desire to attach any relief package to a spending bill and avoid a partial government shutdown over the festive period. But that doesn’t necessarily mean that they will be able to bridge their remaining differences. I do believe that something will pass that sees the country through to the new administration but negotiations will have to begin again almost immediately to avoid a similar situation early in the new year.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam