Overview
- Dollar gains on US tax reform
- European stocks march higher
- Oil retreats
US Markets
The dollar rose 0.4% against a basket of major currency pairs as the Senate passed a bill which will help to push tax reform to the next stage.
The budget will have to be passed by the House, but the news should be supportive of the greenback in the near term.
Meanwhile, Donald Trump is still on the hunt for the next Federal Reserve chair. The President is expected to make the decision before November 3rd. Trump is rumoured to be swaying towards Jerome Powell to replace Janet Yellen.
The President met with Janet Yellen yesterday, to interview the chair for a second term. Although, Trump has condemned Yellen in the past, making it less likely that she will be reappointed.
Existing home sales and the Federal balance sheet will be released later in the day. The data may shine a light on the biggest economy in the world.
US equities are climbing higher after yesterday’s sharp decline. Investors became increasingly worried about the credit and debt markets, reducing their exposure to risker assets.
European Markets
The euro is 0.4% weaker against the greenback as investors keep their attention fixed on Spain’s political tensions.
The eurozone’s proxy, the DAX 30, and Spain’s index, the IBEX 35, are both 0.2% stronger. France’s CAC 40 is swimming against the tide, down 0.06% as we veer further into the European session.
As Brexit talks begin in Europe, the pound is 0.33% weaker against the euro.
Expectations that the Bank of England will raise rates in November are high, which has supported the pound over the last few months – inflation in the UK has reached 3%.
However, EU-UK negotiations have been mostly unsuccessful, which has weighed on the pound.
Brexit talks recommence in Brussels today. British Prime Minister Theresa May has made a personal plea to eurozone officials to move onto the subject of trade.
The FTSE 100 is 0.23% higher.
Asia-Pacific Markets
The New Zealand dollar weakened after a coalition between Labour and Nationalist party was formed on Thursday. During the Asian session, the Kiwi hit its lowest level in five months. The New Zealand dollar is now 0.8% weaker against its US counterpart.
After a bearish day yesterday, Asian equities are trading upwards. Hong Kong’s HSI is 0.5 higher, while the Nikkei 225 is 0.73% stronger.
The Japanese yen fell 0.7% against the dollar, the dollar is at its highest point against the yen this month.
Commodity Markets
Oil has slipped downwards after initially climbing in early European trading session.
Brent oil is 0.8% lower, while the US benchmark, crude oil, is 1.2% weaker.
Gold has given up 0.7% as demand for safe-haven assets dwindle.