Joe Biden was sworn in as the 46th president, risk-on

Joe Biden was sworn in as the 46th president today for which markets had been on edge amid heightened security after the insurrection at the Capitol.

Only about 1,000 socially distanced guests, including former Presidents Barack Obama, George W. Bush and Bill Clinton, attended.

To little surprise, Donald Trump was not present, making him the first president to skip a successor's inauguration since Andrew Johnson.

Joe Biden's speech focussed on the same themes of unity and bipartisanship that were a feature of his election campaign, but it remains to be seen how his ambitious spending plans will survive the reality of a narrowly divided Congress.

Market implications

This is where the US dollar comes into question.

The more important factors for how the dollar fares under Biden will probably be his fiscal policy.

Even if he gets only half of the fiscal stimulus he is calling for, however, it would result in another significant tailwind to what is already likely to be a rapid economic recovery this year.   

It will also matter how the Fed will respond to it. But Biden's plans appear to have contributed to a stabilisation of the dollar over the past couple of weeks.

However, there was a shakeout of longs, especially vs the commodity complex, just ahead of his inauguration as risk sentiment spiked. 

The S&P 500 popped in the open and continued to edge higher around the event as Wall Street hit new record highs.

USD/CAD fell from 1.2698 to a low of 1.2606 (optimistic BoC) and AUD/USD spiked from 0.7728 to a high of 0.7760. 

Risk sentiment will steer the path for the foreseeable future and it will likely be determined by the spread of covid and the pace of vaccine roll outs. 

Markets will now be turned into his day one executive actions which will be followed by additional regulatory and policy changes over the coming weeks.

However, there is nothing on the list that will likely implicate Wall Street for the time being. 

The Day One agenda includes:

• Re-Engaging With World Health Organization.
• Mask Mandate on US Properties.
• Eviction and Foreclosure Moratoriums.
• Easing Burden of Student Loans.
• Rejoining the Climate Agreement.
• Revoking Keystone XL Pipeline.
• Fuel Standards, and Use of Federal Lands.
• Revisiting Trump’s Regulatory Agenda.
• No More Money for Wall.
• Scrapping the Travel Ban.
• Counting Noncitizens for the US Census.
• Bolstering Sanctuaries and the DACA Program.
• Protecting Liberians Who Fled Civil War.
• ‘Racial Equity Review’ for All of Government.
• Closing Down the 1776 Commission.
• New Protections Against Discrimination.
• Ethics Rules for Political Appointees.

The administration’s first White House press briefing will take place tonight at 7 pm ET.