On Tuesday, the US Dollar fell versus the Japanese Yen, as Treasury Yields slipped on uncertainty over whether the Republicans can pass their tax bill in a timely manner. The uncertainty reduces hopes for faster economic growth, and there are worries about the scale of borrowing needed to finance the tax plan. Meanwhile, NY Fed President William Dudley announced on Monday morning that he would retire earlier than expected in mid-2018. With Chair Yellen leaving in February 2018, Dudley’s departure would mean the top three positions at the Fed changing hands in a relatively short period of time, will increase already heightened policy uncertainty.
On Monday as well, the British Pound bounced against the US Dollar, after three consecutive weeks of losses, despite signs of instability in Britain’s governing Conservative party and uncertainty around Brexit negotiations. Carney said last Sunday that Britain’s economy would grow more slowly in the short term if the country failed to secure a future trading deal with Europe, and that uncertainty over the progress of divorce talks was impeding British business.
The Australian Dollar steadied against its US counterpart early yesterday as Australia’s Central Bank left its cash rate at a record low of 1.5%. Signs indicate that it would stay side-lined for months in the face of stubbornly low inflation and caution among debt-laden consumers. The RBA eased twice last year but has since held steady as it balances the risk of fuelling further borrowing in the country’s red-hot property market against tepid inflation.