The dollar lost positions after announcing details of the US tax reform

The dollar lost positions after announcing details of the US tax reform


The dollar fell to its lowest level for the week following the Republican tax reform. The reform foresees a reduction of corporate tax from 35% to 20%, and tax cuts for citizens. According to most analysts, the proposal will not be able to gather the necessary support in Congress. Markets that had high expectations of rapid tax reform seem to have lost hope.

Still,such a reform would have the potential to increase consumption, boost inflation and make the dollar more attractive. As expected, Donald Trump chose Fed Chairman Jerome Powell, who is considered to be the Fed governor, who has the closest views to Janet Yellen’s. The differences lie in the opinion of the financial sector regulations introduced after the financial crisis. Powell is of the opinion,

The dollar index dropped to 94,411 points, its lowest level since October 26. Earlier in the day, increases were recorded, even reaching a two-month high, but at the end of the day the euro rose at the expense of the dollar, with the single currency rising to 1.1687 dollars per euro. Green money reached bottom even against the yen following the announcement of the bill on tax reform. The currency pair reached a value of 113.55 yen per dollar. Only the GBP / USD pair was stable, the pound lost more than a percentage of its value after announcing the expected interest rate increase, which was fully reflected in the price before the announcement of the decision itself. The AKB spoke cautiously, saying that the tightening of monetary policy would be very smooth for at least the next three years.

Thanks to strict compliance with the OPEC Restriction Agreement and the organization’s partners, the WTI oil variety has achieved its highest closing price for more than a year. The improved market outlook and growing optimism in the markets led to a WTI barrel of 24 cents higher, ending the day at $ 54.54, the highest closing price since mid-2015. The Brent variety also was performing well and finished the day at $ 60.58. The highest closing price for the past two years was reached on Wednesday – 61.7 dollars.

In the early hours of Friday, the dollar remained stable against the basket of currencies after the focus of the markets turned to the private sector employment figures that will be released today. The excellent labor market situation has begun to affect hourly pay, which is the driving force behind consumption and inflation. Therefore, this data can be said to be key to future monetary policy. Expectations are for 300,000 new jobs in October.

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Zac Berry is presently a full time editor at Market Morning. He covers the M&As and follows live market commentary. Before joining Markets Morning, Zac Berry worked with a start-up, where he worked in the capacity of a Team Leader tracking company events and results. Born in the U.A.E, he spent most of his growing up years in Dubai. Currently, he resides in U.S. and is pursuing his charter in Accountancy.