The U.S. dollar benefited following developments in Washington DC that helped buoy optimism about tax reform. Indeed, that last sentence is not a typo. Last night, the Senate adopted the 2018 budget and House GOP leaders have agreed to accept.
The U.S. dollar benefited following developments in Washington DC that helped buoy optimism about tax reform. Indeed, that last sentence is not a typo. Last night, the Senate adopted the 2018 budget and House GOP leaders have agreed to accept. The budget resolution is said to make it easier for Republicans to pass major tax cuts with only 51 votes, not 60. While some Democrats have cried foul, the U.S. dollar has benefited from the expectation that tax reform may finally be coming down the pike. President Trump tweeted that the legislative maneuver would pave the way for “large scale” tax cuts.
We continue to keep an eye on whom President Trump will pick as the next Federal Reserve Chair. Current Chairwoman Janet Yellen interviewed with President Trump yesterday, but most believe the decision is between current Fed member Jerome Powell and the more “hawkish” economist John Taylor.
The economic docket is relatively light with only existing home sales out at 10 a.m. Sales are expected to have dropped by 0.9% in September after falling 1.7% in the month prior.
The Japanese yen may lead the headlines over the weekend as Japanese citizens head to the polls. It is widely expected that Prime Minister Shinzo Abe will lose his two-thirds majority in parliament making it harder for him to revise the nation’s constitution. However, because Abe’s party is expected to hold on to power, the yen has not seen much volatility in the lead up to the election. Indeed, most market participants believe the Bank of Japan will maintain its easing program for some time to come.
The British pound is still reeling after yesterday’s dreadful retail sales number. Beleaguered Prime Minister Theresa May found some backup from German Chancellor Angela Merkel. Merkel said “both sides need to move” in terms of the Brexit negotiations. Merkel continued on to say that there is no indication talks with fail. Nevertheless, the sterling is set to close lower for a fourth week out of five.