US Dollar Volatility Ahead Amid Scramble for Single Tax Cut Plan
- US Dollar down as Senate tax cut proposal underwhelms
- Congressional reconciliation efforts set to stoke volatility
- NZ Dollar drops as FinMin talks RBNZ mandate change
Yet another quiet day on the European economic calendar is likely to keep US news-flow in the spotlight. November’s edition of the University of Michigan consumer confidence gauge is due, but traders will probably remain focused on US tax cut prospects as the more direct influence on Fed policy bets.
The Senate’s version of a tax reform proposal was plainly underwhelming, with stocks and the US Dollar plunging after lawmakers proposed delaying corporate tax cuts for a year. Incoming soundbites are now poised to stoke seesaw volatility as efforts to reconcile the House and Senate version get underway.
The New Zealand Dollar underperformed in otherwise quiet overnight trade following comments from newly-minted Finance Minister Grant Robertson. He said the RBNZ’s 2 percent inflation target “could be up for discussion” and predicted that the adoption of a dual mandate “may see looser policy” in some cases.
The markets follow the central bank’s own efforts to pour cold water on this week’s policy statement, which markets interpreted as relatively hawkish. Assistant Governor John McDermott said policymakers are “in no rush” to raise rates yesterday, sending the Kiwi lower.
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** All times listed in GMT. See the full DailyFX economic calendar here.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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