US: GOP’s House of tax pain, only thing jumping around is the dollar - ING

Global markets haven’t batted an eyelid to the House Republicans passing their version of the Tax Cuts and Jobs Act through – not least because the spotlight has been stolen by reports that US Special Counsel Robert Mueller has issued subpoenas to President Trump’s 2016 election campaign officials, according to Viraj Patel, Foreign Exchange Strategist at ING.

Key Quotes

“Add to this noise surrounding US-North Korea diplomacy and it’s difficult to see anything but the US dollar losing out in an environment where policy and political uncertainty remains elevated. Indeed, the true test for the Tax Bill now comes in the Senate, where the GOP has a very thin lead and tricky task of appeasing both the fiscal hawks and conservatives within its more stricter budgetary framework.”

“But with Congress now in Thanksgiving recess, we see limited positive catalysts for the dollar in the week ahead – with only a Yellen speech (not confirmed) and FOMC minutes to look out for. Fed policy remains a factor for only short-term players in the market, with the big picture of an exhausted Fed hiking cycle all but priced in the dollar. Shaky global risk sentiment could see DXY close sub 93.50 (50-dma).”