New York Forex Report: Tax Reform Issues Being Ironed Out

New York Forex Report: Tax Reform Issues Being Ironed Out

New York Forex Report: The USD traded poorly through month-end yesterday overall and has slipped a little further into the end of the week amid signs that Senate Republicans are struggling to agree on the tax overhaul. A vote on the plan was delayed last night after a compromise agreement on restraining deficits in future years collapsed. The Senate had aimed to wrap up their voting on by today. Markets remain somewhat cautious on the outlook for the tax overhaul but a win for the Republicans in the Senate will enhances prospects for tax cuts getting implemented fairly swiftly. Assessments on the net economic effect of the plan suggest a modest positive impact on growth only and we expect additional support for the USD from tax cuts may be limited. The USD is little changed against the EUR on the day and has gained somewhat against an under-performing GBP (amid renewed Brexit jitters). But it is lower against the NZD, JPY, CAD and CHF so far.

NORTH AMERICA Dallas Fed President Kaplan reiterated it would be wise to hike rates in the “near future” while Fed’s vice chairman for supervision Quarles warned digital currencies may create “serious financial stability issues” if widely adopted. He is “particularly concerned” potential central bank digital currencies could face money laundering, cyber-attack issues. US core PCE came in alongside consensus at +0.2% MoM and +1.4% YoY in Oct

EUROPE Signs of progress on Brexit negotiations boosted sterling. The euro benefited from a further slew of strong Eurozone data, with many economists revising up their growth forecasts for the currency bloc. While the US data were generally solid, the dollar lost some ground against the comparatively firmer sterling and euro. Coming into the last few weeks of 2017, the Brexit negotiations will remain the key for sterling, with particular focus on the EU Summit (14th/15th). The Irish border now looks to be the main potential stumbling block. Assuming the Eurozone data remain strong, then the euro may remain well supported

ASIA Spreads are once again dominating as market participants shift their focus from geopolitical concerns. Comments from the BoJ’s Harada have maintained a focus on the BoJ’s exit from its exceptionally accommodative monetary policy

Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish

Technical: 1-3 Day View – 1.2092 cycle high vulnerable to retest, near term upside hurdle sited at 1.2010/30, near term support moves to 1.1850, below 1.18 suggests a false upside break an opens a retest of 1.17

1-3 Week View – 1.2130 the next upside objective. Weekly close below 1.16 neutralises bullish objectives opening a test of 1.14
Retail Sentiment: Neutral
Trading Take-away: Neutral

Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish

Technical: 1-3 Day View – 1.3460 achieved, through here opens prior cycle highs at 1.3650 near term support sited at 1.3390 only below 1.3230 concerns bullish bias

1-3 Week View – 1.3263 achieved as this acts as support 1.3836 is the next upside objective only a close back below 1.30 would jeopardise the bullish advance.
Retail Sentiment: Bearish
Trading Take-away: Long

Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Technical: 1-3 Day View – Initial 110.85 test prompts profit taking , near term resistance moves to 112.50 and bears have the ball while below 113, a breach of 110.60 opens 109.30/10 as the next downside objectives

1-3 Week View – As 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet
Retail Sentiment: Neutral
Trading Take-away: Neutral

Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Neutral

Technical: 1-3 Day View – Retest of range support once again attracts bids below 131, as this level survives on a daily closing basis expect a retest of 134 range resistance. Failure below 131 opens 130.66 ahead of pivotal 127.50.

1-3 Week View – 136.10 is the principle upside objective as this area caps the current advance expect a retest of 131.50 to set a base for the next leg higher, a closing breach of 131 concerns the bullish basis.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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