Hopes for a significant reform in US taxes is one of the key drivers of the dollar. But the hard part still awaits:
Here is their view, courtesy of eFXnews:
Nomura Research comments on the yesterday’s release of US tax reform proposal noticing that its stated goals of the proposal are to reduce the complexity for individuals, provide middle-class tax relief, and lower the tax rates on businesses.
“What was not discussed today were the aspects of the tax reform that we believe will make it difficult to pass: the effects on the deficit, the elimination of tax deductions, and the distributional impacts. In the coming weeks and months, these unresolved issues will have to get more attention,†Nomura adds.
Overall, Nomura’s base case is that that it’s likely that Congress will pass tax cuts for individuals in early 2018, but remains pessimistic about the likelihood of significant corporate tax reform.
As such, Nomura maintains its structural bearish view on USD.
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