USD Higher After Senate Passes Tax Bill; GBP In Wait-And-See Mode

The U.S. Senate’s approval to pass the tax cut bill on Saturday overshadowed the continuing investigation into connections between U.S. President’s inner circle and Russia. The U.S. dollar rallied across the board with most gains seen against the Yen which fell to a two-week low early Monday. U.S. 10-year treasury yields rose above 2.4% after falling 10 basis points on Friday. Although it does not appear that investors’ optimism will send yields towards 2017 highs, if the yield curve manages to steepen further in December, we are likely to see more inflows to the U.S. dollar.

This would largely depend on how talks between the Senate and the House develop in the weeks ahead, but with the government shut down looming, there’s likely to be some noise in currency markets.

Brexit talks resume Sterling is the only major currency treading water against the dollar on growing confidence that Brexit negotiations will move to a new stage when E.U. leaders meet in mid-December. Numerous reports last week indicated that the U.K. is getting closer to announcing a porce bill that will lead to significant progress in Brexit talks. Today’s meeting between Theresa May, Jean Claude Junker and Michel Barnier will provide an early indication of whether the U.K. is getting closer to negotiating trade deals. The three main barriers to overcome are the Brexit porce bill, Irish Border and E.U. expatriates’ rights. Significant progress on this front will likely push Sterling higher -to retest 2017 highs at 1.3656.

It is the nonfarm payrolls week The Federal Reserve is expected to continue tightening monetary policy by raising rates another 25 basis points on 13 November. Given that a final rate hike is already priced in, the trajectory in 2018 remains unclear given the uncertainty towards the fiscal progress and inflation path. Friday’s non-farm payrolls will be the final jobs report released in 2017 and will help the Fed assess whether inflation is likely to strengthen next year. Nonfarm payrolls are expected to have increased by 198,000 in November, after climbing by 261,000 in October. According to Thompson Reuters, the key figure traders should focus on, is wages which have been the missing ingredient throughout this year. An increase in wages of 0.4% or above, will support the central bank’s argument that low inflation should be attributed to temporary factors, and this should provide a further lift to the U.S. dollar.

Disclaimer: The content in this article comprises personal opinions and ideas and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.

0 0 votes
文章评分
Subscribe
Notify of
guest
0 评论
Inline Feedbacks
View all comments