Dollar on back foot as tax deal doubts

Yesterday, the Dollar was on the defensive as doubts for the prospects of US tax reforms, a fall in US Stocks, and declining High-Yield Bond prices all soured the mood, offsetting an uptick in underlying US inflation. Data released showed core inflation accelerated to 1.8% in October 2017 after staying at 1.7% in the last five months, while retail sales increased 0.2% beating market expectations. However, the Dollar’s strength was limited on news that the Senate Republican tax plan received opposition from two Republican lawmakers, a possible warning sign for the plan. Republican Senator Johnson openly expressed his opposition to both the Senate and House versions of the tax bill. He criticized that the plan benefits large corporations at the expense of the others, including smaller companies. Republican Senator Susan Collins also criticized the move to include the never-ending repeal of Obama care in the tax bill.

Meanwhile, The Australian Dollar bounced from a five-month low of 0.7567 against the US Dollar as upbeat local employment report triggered a round of short-covering. Data showed that full-time jobs surged by 24,300 in October 2017, more than the 9,300 a month ago, while jobless rate fell to 5.4% the lowest in more than four years.

On Wednesday, the Swiss government said that the Swiss Franc remained “highly valued” despite its recent weakening versus the Euro. SNB Chairman Thomas Jordan, during his annual meeting with the government, stressed that negative rates and readiness to intervene on currency markets remained appropriate to restrict appreciation of the currency.