GOP unified on tax plans – now for the rest of the USA

Unity and approval for the Republican tax plan helped the USD higher yesterday as Trump announced the Republicans are set to work on passing a bill that would represent a huge win for the Trump administration (if accomplished…). While all the jazz and hoopla of the tax plan announcement was being made, the Senate very quietly decided not to progress another vote on the repeal of the Obamacare program.

With the high level of spending that Obamacare needs and a huge tax cut possibly coming down the chute, the US’s budget deficit will be in focus again and will limit just how many cuts to tax revenues can be made.

Nothing comes quickly in the Trump administration and tax laws are not changed on a dime so this will take a while to actually get through the various committees before coming to a vote.

Barnier puts Brexit fever on ice

While almost congratulating UK PM Theresa May for getting Brexit negotiations back into gear, the European Union’s chief negotiator Michel Barnier warned that excitement over the imminent beginning of trade negotiations was premature. He warned that it could still be months before enough progress is made in talks with the UK before future trade relationships pop up in conversation. While the pound’s taken the comments in its stride, it appears the warnings are working after the PM this morning admitted that departing from the Single Market would come with associated risks and dangers.

Reserve Bank of New Zealand hold rates

The RBNZ held interest rates overnight at 1.75% as was widely expected reiterating the forward guidance that it gave in August i.e. that interest rates will remain “accommodative” for a considerable period. Comments on the strength of the NZD were limited to “a lower New Zealand dollar would help to increase tradables inflation and deliver more balanced growth” and markets have, for once, helped the central bank by pushing NZDUSD lower.

The day ahead

With the bulk of US data out of the way (another GDP revision, personal consumption inflation figures and weekly jobless claims) and coming in broadly alongside expectations, focus shifts once again to the speakers on the calendar: Fed’s George and Fischer are both due this morning.

Have a great day.