Donald Trump postponed talks on aid package for the American economy - 7.10.2020

On Tuesday, the US dollar index rose slightly amid a noticeable decline in the stock market. US President Donald Trump unexpectedly announced that negotiations over financial assistance to the American economy should be postponed until the presidential elections on November 3. Meanwhile, Fed Chairman Jerome Powell said yesterday that monetary  stimulus is necessary and investors expected it to start soon. Let us recall that the Democrats earlier offered a $2.4 trillion economic assistance package. The weak growth of the dollar, with the elimination of additional emmision for the allocation of these funds, may have been due to negative US foreign trade statistics for August. The trade deficit was the highest since 2007.

On Tuesday, US stock indices dropped due to the US President’s refusal to release financial aid to the economy until the 3 November elections. Consumer sector shares (-2.1%) led the loses. An additional negative factor for them was the outlined increase in the number of coronavirus patients. To date, 210,000 people in the United States have died from this disease. This is more than the annual number of victims of common flu (from 22,000 to 64,000). According to Reuters/Ipsos polls, 52% would vote for Democratic candidate Joe Biden and 40% for Republican Donald Trump. Biden stated that more funds should be allocated to the unemployed and Covid-19 Americans.This morning, futures on America’s stock indices rose markedly, as Trump specified that if he won the presidential election, he would approve a large program of economic aid.  In the meantime, he proposed to Congress to provide funds to support airlines, small businesses and low-income Americans. Today, the proceedings of the September Federal Reserve Meeting (FOMC Minutes) will be published in the United States.