If the volatility of the stock markets reflects in recent days some doubts about the rapid adoption of a new fiscal stimulus plan in the United States, the currency and sovereign rate market seems to believe in a massive new program of support for the economy in the face of the coronavirus crisis.

Thus, the dollar index, which measures its evolution against a basket of 6 reference currencies, fell by 2% in 4 weeks, returning Wednesday evening to 92.61 points, the lowest since the beginning of September. Heightened optimism surrounding a new U.S. stimulus package has helped boost demand for riskier currencies, at the expense of the greenback.

The euro, on the other hand, rose to $1.1860, the highest since mid-September against the greenback.

It should be noted that the dollar has now fallen to the lowest since July 2018 against the Chinese yuan renminbi, at 6.6411 yuan/$ (+0.5% on Wednesday), the Chinese currency having been supported in recent weeks by the fairly solid rebound of the Chinese economy following the coronavirus pandemic.

In the US bond market, the yield on the 10-year government bond (T-Bond) rose from 0.66% on September 25 to 0.81% on Wednesday evening, rising to the highest since last June. This rebound in interest rates reflects the prospects for an acceleration of the economic recovery should a new fiscal support plan be adopted.

The US Senate far from being convinced by the urgency of a massive plan

In Washington, the discussions, which have been going on for three months, on this new stimulus plan seemed to be heading for a positive outcome on Wednesday, just two weeks before the US presidential election on November 3. Democratic House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin are continuing their discussions and have been optimistic about a possible deal. According to the American press, Donald Trump and the White House would now agree on a plan of $ 1.88 trillion, while the Democrats are still demanding $ 2.2 trillion.

Still, the Republican-dominated Senate remains reluctant to the idea of a massive new plan, which could complicate matters, despite this willingness to agree. Republican Senate Majority Leader Mitch McConnell said the Senate will vote Wednesday on a limited and targeted $500 billion support plan. He also indicated that in the event of an agreement between Pelosi and the White House, the Senate would consider the text... But according to media reports, McConnell on Wednesday called on the Republicans and the White House not to reach a major agreement with the Democrats before the Election on November 3rd...