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European markets are mixed near opening levels on Thursday's early trading awaiting the ECB and BoE rate decisions, followed by President Ben Bernanke's speech on US economic outlook and finally Obama's address to Congress. Obama is expected to propose a $300-$400 billion plan to boost employment growth and creation.

Obama’s plan includes tax incentives for companies that hire the unemployed, financial aid for road and rail construction, and infrastructure spending. Tax cuts include an extension of the payroll tax reduction that is due to expire December 2011. Members of the Republican Party said that they will oppose any measure that will add to the deficit. Republicans control the House of Representatives while Democrats the Senate.

“Given the gulf between Democrat and Republican lawmakers, one of the most likely ways forward would be to tap currently unused sources of funds that would not blow a hole in the Congressional Budget Office’s deficit projections,” suggests Bill Hubard, Chief Economist at Markets.com. “One policy that fits these criteria would have been a re-run of the Homeland Investment Act (HIA), but an open-ended version to spare the USD from unwanted appreciation. Any overseas profits returned under such a policy would have to be ring-fenced for job creation or domestic investment, but would benefit from a very low corporate tax rate, say 10% (instead of 35%).”

Last Friday, the NFP report showed that the US economy did not create jobs during August, increasing concerns about the possibilities of another recession. Obama’s administration seeks to boost the economy and also the Federal Reserve is expected to announce new measures in the next FOMC meeting to be held September 20, 21.

Stocks have strengthened over the last few days thanks to good news coming from Europe, while the dollar has weakened which is mainly due to expectations for more stimulus. During today's Asian session however, preceding the key speeches “the dollar climbed 0.2 percent versus the euro and rallied 0.6 percent against the Aussie as of 4:02 p.m. in Tokyo. The yield on 10-year Treasuries fell two basis points,” according to Bloomberg.

The Saxo Bank Strategy Team think that the dollar might fall after Obama presents his plan:”Yesterday, the news that the speech would mostly include extensions of existing tax cuts and support for local governments, infrastructure spending and extension of unemployment benefits was not particularly supportive for the USD – the key, as have discussed, is whether an HIA-2 program is tied into the speech and the measures.”