The dollar fell and risk assets rose on hopes that the U.S. will be able to cobble together a fresh stimulus package before the election after all.

Treasury Secretary Steven Mnuchin announced that he had “productive” discussions with House Speaker Nancy Pelosi about a new fiscal stimulus. Democrats and Republicans agreed on $600 billion of the package’s sticker price. The package should contain a new round of stimulus checks for households, which analysts see as key to sustaining consumer spending.

According to the economist, the new strategy to support the economy means that the period when the Fed acted preventively is coming to an end. If inflation rose, he tightened his policy so that it did not exceed 2%. But now he will not do so and let inflation be overshot.

"If there was ever a time to think about rising inflation, then it is a time of gigantic fiscal deficits combined with a very loose monetary policy. prices are now affected by real shocks, and that when they pass, inflation expectations will rise,” said James Bullard, head of Federal Reserve Bank of St. Louis.

Performance of Dollar index (Source: Tradingview.com)