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Senate tax-cut bill may delay corporate tax breaks

FX:EURUSD   Euro / U.S. Dollar
The ECB is ready to postpone the introduction of more stringent rules on bad debts after European Parliament and Italy took swipe on the project, one of ECB governors said on Thursday. The regulator is seemingly prevented to take security measures against the background of a gradual stimulus downgrade as the regions are still heavily dependent on cheap cash and soft credit conditions are simply necessary for them. The banking sector of the European Union rose, euro gained 0.15% against the dollar, keeping the defense at 1.16.

Sterling has been spending a lot of time in the red zone despite the recent interest rate increase by the Bank of England. Obviously, that sunk into discord Brexit talks significantly undermine the prospects of British economy, which is also reflected in the national currency. Internal contradictions in May’s conservative party are also dissuading markets about the ability to conclude a trade deal with the EU. The rebound from level 1.30 has been traded out from last week, so in case of further weakening the pair has all chances to go below the key level of 1.30.

The dollar continued its retreat on Thursday, as investors are waiting for a version of the Senate tax bill that may differ significantly from the version of the House of Representatives controlled by Republicans. For Democrats, this way of opposing the reform remains the only one and judging by the reaction of markets causes considerable concerns. Recall that Trump's tax plan is the largest episode of fiscal stimulus in the past almost 40 years (since Reaganomics).

Regarding the economic reports for today consumer inflation in China rose to 1.9% with the forecast of 1.8%, which dragged oil prices in positive territory on the prospects of demand of the world's largest consumer of oil . Commodity markets met this news with joy. Mortgage loans in the Australian economy declined easing concerns about the real estate bubble, Germany's trade surplus once again exceeds the forecast, indicating that the economy has gained enough height and fare well without support of the Central Bank . Unemployment benefits in the US due later today will help to assess the dynamics of the labor market, as well as the state of the economy in the fourth quarter.

Arthur Idiatulin
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This analysis is provided as general market commentary and does not constitute investment advice.
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