It was a fairly tight trading range in Asian markets overnight however gains were strong on Wall Street as it looks increasingly clear that Donald Trump has the votes to pass through the Tax bill at some point during today’s session. The Dow ended up closing 140 points higher during yesterday’s session closing at record highs for the 70th time in 2017, a new record in a calendar year. The secure passage of the tax plan is coming at the right time to class the next leg up in equity markets as the Santa rally, and it’s very likely to lead to yet more record closes for The Dow, S&P and Nasdaq.
Again it’s fairly quiet on the calendar today, with the German IFO and US housing starts, building permits and current account readings all due in the North American session. Of course these data releases will be pushed to the background if we do get the announcement of the Tax bill passing through the house. The IFO reading could well give some life to the euro that has had a particularly bullish session first thing this morning, mainly driven from the US dollar weakness that has continued from yesterday’s session. However all in all currencies are particularly range bound in the last few hours dominated by the US dollar stories that are likely to continue throughout today.
The RBA said overnight that their rate setting policy was broadly in line with growth and inflation forecasts as recent data shows that the employment situation continues to improve, along with growth and inflation. However very much like other the US and UK (before Brexit) there are issues over stagnant wage growth. A move to push interest rates higher and increase debt payments across the board would leave many households struggling with mounting debt. The RBA said that they didn’t feel that the benefits from low unemployment were being felt across the board. The details from the RBA failed to give the Aussie a substantial move, again down to the thin volume we are seeing across markets.