Stocks Look Ready To Test New Highs

by Warrior2

The U.S. House approved $2,000 stimulus checks, and the market attention shifts to the Senate.

Stimulus Payments Remain In Spotlight

On Monday, U.S. House of Representatives approved the increase of direct stimulus payments from $600 to $2,000 per person.

Now, traders’ attention shifts to the Republican-controlled Senate which may be reluctant to approve a significant increase of the coronavirus aid package.Advertisement

Traders remain optimistic on the outlook for bigger stimulus checks, and S&P 500 futures are gaining ground in premarket trading.

There are no important economic reports scheduled to be released today, so market participants will remain focused on the fate of increased stimulus payments.Advertisement

Britain Continues To Suffer From The New Strain Of Coronavirus

While global markets are in a good mood thanks to the new U.S. coronavirus aid package and the successful Brexit deal, the situation on the coronavirus front remains challenging.

On Monday, Britain, which has to deal with a new, more infectious strain of the virus, reported 41,385 new COVID-19 cases, a daily record. Most likely, the British government will have to introduce additional virus containment measures in January to stop the spread of the virus.

The problem with the new strain of the virus may not be limited to UK as the new strain has been already found in several European countries. In the near term, global markets will likely ignore the challenging situation in the UK as traders are ready to focus on the longer-term outlook for the economic recovery.

However, the new strain should be closely monitored as it may ultimately become a significant problem for markets if it starts to spread actively outside of UK.

U.S. Dollar Is Moving Towards Yearly Lows

The stimulus optimism continues to put significant pressure on the American currency which is slowly declining towards yearly lows. The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, is currently trying to get below the psychologically important 90 level.

If this attempt is successful, it will head towards the yearly lows near 89.75 which will be bullish for stocks and commodities. Interestingly, gold and silver remain far below their yearly highs as the favorable impact of the weak dollar was offset by lower demand for safe haven assets.

At this point, it looks like the U.S. dollar has a good chance to continue its downside move in the last few days of the year which could serve as an additional positive catalyst for global markets.

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