Dollar falls out of love ahead of tax reform

FX:UKOIL   CFDs on Crude Oil (Brent)
All the major gloom on US currency has been priced by market participants this week, pulling back the index to 93.00 before the announcement of tax-cut package details. Thinner volume across the Pond, as well as elevated market concerns revealed the market majority preferred to cut wagers on US currency before fiscal stimulus news come out next week. And this was the reason why Fed Minutes and a chunk of macroeconomic data, including orders for durable goods, received an excessive bearish interpretation.

Donald Trump promised in a festive tweet that he is committed to deliver tax cuts, but a poll by Reuters showed that the belief in this is weak. The poll also questioned the effectiveness of the reform in spurring economic growth.

USDJPY advanced to the level of 111.50, as demand for yen rose after the flight of investors from the Chinese stock market. CSI 300 showed the strongest decline in 1.5 years by 3 percent, after Chinese authorities stepped up work on reducing credit risks in the economy. On Friday, the index fell further by 0.9%.

European currency

EURUSD reached the level of 1.1850 this week, the highest since the beginning of October, as the business surveys, as well as sector PMIs exceeded forecasts, pointing to the high confidence of corporations in the economic recovery. Expectations as a leading indicator are probably be the strongest driver for European currency as the ECB has already more or less outlined its position on monetary policy .

Pound sterling

On Friday, the pound sterling retreated from the six-week high of $ 1.3337, but rumors of a positive shift in the Brexit negotiations have become a sufficient catalyst for hungry for positive news investors. The results of today's May talks in Brussels can be crucial for the British currency.

High willingness to negotiate

Draft of the OPEC meeting on November 30 in Vienna takes only three hours for negotiations of ministers of oil exporting countries to extend the OPEC + pact. At past meetings, they could continue until the morning, which indicates low discord and high willingness of representatives to confirm the deal. Secretary-General Mohammed Barkindo said on November 7 that the working group was trying to agree on the terms of agreement's prolongation before confirming it at an official meeting. The oil market keeps an upbeat mood due to various news saying in favor of reducing supply of crude oil .

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