The inauguration of J. Biden has become the strongest driver of growth in demand for US stocks and the overall risky assets. In this case, the US dollar was under pressure, which declined after the demand for US Treasury government bonds rose.

This ceremony of the 46th US President became the basis for a massive rally in US stocks, price growth for precious metals and commodity assets, primarily oil, as well as the reason for the US dollar's weakening.

As previously indicated, such dynamics is primarily related to the declared and already starting to be implemented policy of the new president of the United States. In particular, we are talking about the expectation of a new large-scale stimulus in the amount of $ 1.9 trillion. However, markets are in great doubt that this program will be implemented in full. Moreover, it is also highly possible that the distribution of cash flow will not be in favor of the real sector of the economy. Skeptics believe that Republican and several Democratic congressmen will not support this futuristic aid package.

If the congressional approval meets with resistance – it could be a major blow to equity markets, especially in the States, since it recently rose on hopes of its implementation. In this case, the stock indexes can significantly correct downwards, while the US dollar will rise.

Today, the market will focus on the ECB's final decision on monetary policy. They expect a clear signal from the regulator about the prospects of monetary policy, considering a change of power both politically and somewhat economically in the US. It is likely that the European regulator will have to seriously attend to the euro's growth, given the difficult situation with the coronavirus pandemic. However, this reduces the ability of European producers to compete confidently in world markets. If this topic is not discussed today, we still expect it to be talked about in the near future and force the ECB to take measures to limit the growth of the euro. However, it will be difficult for them to do this in the conditions of the Fed's super-soft monetary policy and other economically developed countries, which have also taken measures to reduce the exchange rates of their national currencies.

The current dynamics in the currency market will be entirely dependent on the movements of the US stock market, which actually forms cash flows. If some corrective decline is observed today after yesterday's inaugural rally, it will support the US dollar and put local pressure on the currencies traded against it.

Forecast of the day:

The USD/CAD pair is recovering on the wave of price decline in oil and a halt in the growth of stock markets. If the level of 1.2625 is broken and the price consolidates above it, local growth can be expected to 1.2785.

The AUD/USD pair is declining amid profit-taking after the inaugural rally in the US stock market. A price decline below the level of 0.7755 may lead to a correctional fall to 0.7700.