Last Friday, the Dollar inched higher against its peers and was on track for its biggest weekly gain so far this year as investors digested the tax plan and the outlook for Fed policy. Trump’s tax plan, which still needs approval from Congress, currently lacks detail, leaving investors guessing which parts of the package will be prioritized by the administration. Meanwhile, chances of higher US interest rates by the end of the year now sit at about 65%, as investors bet the world’s largest economy can handle tighter policy, sending Equities higher and driving money out of Gold.
Meanwhile, the British Pound fell for the fifth day, its longest run of declines since March2017, as Bank of England (BoE) Governor Mark Carney disappointed investors who were looking for fresh signals on the odds of a November interest-rate increase. Sterling inched lower to $1.3343 as the governor opted to focus on the Brexit and the associated risks in a speech at a BoE conference, which seemed to strike a dovish tone. Carney said that while the Central Bank will do all it can to respond to risks related to Brexit, most of the adjustments are not in “the gift of Central Bankers.”
On Friday as well, China’s Yuan slipped against the US Dollar and looked set to post its first monthly loss since April 2017, weighed down by a series of weaker Central Bank fixings and strong Dollar demand heading into a week-long holiday. Prior to market opening on Friday, the People’s Bank of China lowered its official Yuan midpoint for the fifth straight day to 6.6369 per Dollar, the weakest level since August 25, 2017.