The USÂ dollar fell across the board last week following the report that Senate Republican leaders are considering a one-year delay of the tax cut. This pushed the US dollar to a one-week low against the Yen and plunged the US stock market further.
“The delay to the tax cut by one year is certainly a key one for the markets. Many Republicans are also very opposed to the removal of local and state tax deductions. And that’s before we get to those opposed to the simple fact that $1.5tn of debt will be the end result of this plan,†said Derek Halpenny, an analyst at MUFG.
Despite the uncertainty weighing on the US financial markets, the economic fundamentals remain strong with the labor market absorbing more workers and unemployment rate shrinking. Meaning, while the failure to push through with tax reform might hurt business confidence and the US dollar attractiveness in the mid-term, the economy remains healthy from a fundamental standpoint and the decline in the US dollar will merely boost exports and further stimulate the economy.
In China, the People’s Bank of China announced it will remove foreign ownership limits on banks and asset-management firms while encouraging foreign businesses to own majority stakes in local financial companies. This, expert believe will broaden China’s financial system and give global financial companies unrestrained access to the world’s second-largest economy. China’s economy expanded by 6.8 percent in the third quarter after a 6.9 percent growth from the second quarter. Indicating the second largest economy is likely to exceed 2017 growth projection.
In Australia, the Reserve Bank of Australia left the cash rate unchanged at 1.5 percent while at the same time sounding pessimistic about future price pressures. According to the central bank, wage growth remains low and strong price competition between retailers continued to inhibit retail inflation across a broad range of goods. This, the central bank expects to continue for a while.
