Forex overview. Trump’s Tax Bill Is Anything But ’Beautiful’ for the US Dollar – ForexNews.PRO
The Republican party in the House of Representatives might have come to a consensus regarding Trump’s proposed tax legislation, a plan that has sparked worries in the market about its potential effects on the national deficit and increased risks for the dollar’s value. While there are initial indications that US Treasury bonds and stock futures are stabilizing this morning, potentially giving the dollar some support, a lasting recovery seems unlikely.
Market focus has largely shifted to developments surrounding the US tax bill. House leaders are advocating for a vote before the Memorial Day recess and have introduced a revised version that raises the threshold for tax deductions. Market concerns over the deficit impact of the bill have intensified this week, and triggered another selloff in US equities and bonds yesterday. The dollar is weakening as a result.
Although US equity futures and Treasury bonds are showing signs of stabilization this morning, the potential for further market volatility remains. The recent market reaction underscores how swiftly the dollar’s value can decline amidst renewed uncertainty surrounding US assets, thus downside risks for the currency remain elevated.
The European currencies are strengthening, driven by a shift away from US assets. Market participants may also be considering a recent Reuters report suggesting that the European Central Bank has requested banks to stress test their dollar funding needs amid worries that the Federal Reserve could limit access to emergency dollar swap lines.
The British pound has not seen much support from recent CPI data. As a result, EUR/GBP is likely finding support from market instability borrowed from the US.
