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Currency Market Analysis

Dec 20, 2017 | Currency Market Analysis

Global Themes

USD near two-year lows as Trump tax cut looms

The USDSGD fell back towards two-year lows overnight as markets remained on tenterhooks ahead of a key vote on President Trump’s tax cut package.

The tax cut bill passed the House of Representatives overnight and now heads to the US Senate where it will be considered during the Asian trading session today.

The US dollar weakened on pre-vote nerves, despite a strong series of numbers from the US housing market that saw US bond yields jump higher.

Any increase in US interest rates will usually see the greenback strengthen.

Euro jumps

In other market, the focus was on a stronger euro.

The EUR gained after European Central Bank board member Jozef Makuch said current discussions had moved away from asset buying as a way of managing the EU economy.

This was seen as another sign the ECB is near to ending its money-printing program.

Tax cuts loom

Today’s market driver will clearly be from the US with the key tax cut package currently facing the Senate.

While the passage should be positive for the US dollar in the medium term, in the short-term, we might see some volatility.

Tomorrow, NZ and US GDP will be the big events.

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