- US Dollar continues upwards trend this morning
- President Trump promotes tax reform
- Canadian Gross Domestic Product (GDP) and US Unemployment Claims later today
By Mike Mistretta
The US Dollar is trading firm in the Asian session today and maintaining its strength gained overnight. This was inspired by positive ADP Report figures and GDP data from the United States. That was accompanied with mild strength in stocks as the Dow closed up 0.12%. The Dollar Index dropped to as low as 91.62, but it found support just above this. The key will lie in tomorrow's Non-Farm Payroll report, which is always closely watched. There is not always a positive correlation between these and the ADP data, so a firm number is not guaranteed.
President Trump made his first major speech on tax reform yesterday. He highlighted a few key targets, including simpler tax codes, lowering the tax burden on US businesses and cutting rates, cutting tax rates for the middle classes and encouraging firms to bring back cash kept overseas. He painted the picture that lowering business tax rates will boost job growth and wages. However, it was mostly rhetoric and there was precious little detail on the actual plan. Trump said to Congress he's "fully committed to working with Congress to get this job done" and "I don't want to be disappointed by Congress". The US Dollar was largely unmoved.
There isn’t much good news coming from the Brexit negotiations. The European Parliament's Brexit coordinator has said that he doesn’t think negotiations will have made sufficient progress by October. He also pointed out that "the more and more time we lose in the coming months, the more and more it is clear that the transition period can only be the prolongation of the existing situation, of the status quo." This will only extend uncertainty and Sterling should remain under pressure. The third round of negotiations will conclude today. It seems there is still quite some distance to achieve significant progress for European Union to give green lights to start the talks on trade agreements in October.
On the data front, Eurozone inflation figures and the labour market report are due this morning and this afternoon we have Canadian GDP and US Unemployment Claims. The market will then turn its focus to tomorrow’s all important Non-Farm Payrolls.