The US dollar is on the back foot due to some safe-haven flows. But what about the main driver of the greenback? The team at Barclays examines the tax cuts issues.
Here is their view, courtesy of eFXnews:
Barclays Capital FX Strategy Research discusses the USD near-term outlook, noticing that its momentum has stalled after the Senate Finance Committee presented its own version of the tax cut bill.
“It has marked differences from the House version, including the complete elimination of state and local tax deductions, which many GOP Representatives from highly taxed states oppose. As such, it sets the stage for a difficult consolidation process and brings additional uncertainty to the fate of the tax plan.
The recent supports for the dollar, in the form of expectations of a hawkish Fed chair and meaningful tax reform, have been removed, and upside for USD appears limited. The dollar is likely to ebb and flow with news about the tax cuts and other legislative priorities (eg, government funding), but most of the good news seems to have been already incorporated,†Barclays argues.
