In a series of back and forth votes, the tax cuts bill is nearing its final approval by President Donald Trump. A last-minute amendment was needed by the House and was eventually approved by the Senate. Trump announced he would hold a press conference at around 18:00 GMT.
Why isn’t the dollar rallying? This isn’t news anymore. It became clear already last week that Republicans are finding a majority to pass the bill, in some kind of form, in the Senate, where things are more complicated for them. According to all the opinion polls, the American public does not want these tax cuts. Previous tax hikes were more popular than these tax cuts, which is pretty amazing.
But for the dollar, the advance on this topic was good news at least until the final stretch. The reaction to the passage of the modified bill in the Senate is muted, to say the least. USD/JPY is up some 14 pips on the day and trades well within the range, at 113.02. EUR/USD slips only 5 pips and remains on the high ground, at 1.1833. GBP/USD is extremely stable at 1.3386.
Are they waiting for yet another vote in the House? It doesn’t seem so.
So if the dollar is unexcited about these final stages, will it also “sell the fact” once Trump signs it? This scenario cannot be ruled out. It is important to remember that estimates do not show a big bump to growth. If there is no additional growth, there isn’t any additional inflation. And in that case, there are no additional rate hikes, making buying the greenback not the best opportunity out there.
But things may change later on of course. Here is a different opinion: USD: 3 Reasons Why US Tax Reforms A Big Deal To Support USD In Early 2018