Never miss a story from Christopher Vecchio

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Christopher Vecchio

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Talking Points:

- A light economic calendar on Tuesday means the news wire - particularly headlines regarding the US tax reform bill - will be in control of price action.

- The reaction by US equity markets, US Treasuries, and the US Dollar to tax reform headlines thus far suggest investors believe the bill will be good for earnings in the short-term, but not necessarily for long-term growth.

- Retail trader sentiment continues to suggest a mix trading environment for the US Dollar this week.

Upcoming Webinars for Week of December 17 to 22, 2017

Wednesday at 6:00 EST/11:00 GMT: Mid-Week Trading Q&A: Holiday Forecasts

Thursday at 7:30 EST/12:30 GMT: Central Bank Weekly

See the full DailyFX Webinar Calendar for other upcoming strategy sessions

The US Congress is working in overdrive to get tax reform legislation on President Trump's desk before the end of this week, and all signs are pointing to the increasing likelihood that both the House and the Senate have their votes wrapped up by Wednesday at lunch.

As the first piece of landmark legislation during President Trump's first term coming nearly a year into his presidency, investors are taking the tax bill for what it is at face value: a massive Christmas gift for corporations. But the impact of the tax bill will vary across asset classes.

In an environment where corporate earnings growth has already been robust during 2017 - the main fuel behind US equities rallying all year long - a tax bill that promises to bolster earnings even more should carry US stocks well-through 2018.

Yet at the same time, the reaction by US Treasuries and the US Dollar is telling of investors' long-term beliefs about the impact of the tax bill. While it may be positive for corporate earnings growth in the short-term, it is not necessarily being viewed as the same force for economic growth and inflation in the long-term; the US yield curve (2s10s) set a fresh yearly low yesterday at +51.2-bps.

In sum, what we're seeing play out in recent days serves to confirm our 'rest of year forecast' laid out during the Thanksgiving holiday week, "US Assets Taking Divergent Paths: Stocks Look Healthy, the Dollar Doesn’t." Since November 22, the day that forecast was written, the US S&P 500 is up by +3.75% and the DXY Index is down by -0.47%.

See the above video for for technical considerations in the DXY Index, EUR/USD, GBP/USD, USD/JPY, USD/CAD, EUR/JPY, and US Treasury yields.

Read more: US Dollar Technicals Find Little Clarity After Fed, BOE, & ECB

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail

Follow him on Twitter at @CVecchioFX

To be added to Christopher's e-mail distribution list, please fill out this form