Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 21 December 2017 at 8:00 GMT

Morning Markets: Trump scores rare win, markets shrug

Senior Editor / Saxo Bank



  • CA: CPI (13:30 GMT)
  • US: Third estimate GDP (13:30 GMT)
  • US: Unemployment claims (13:30 GMT)
  • EU: Flash consumer confidence indicator (15:00 GMT)

After almost a full year in office, US President Donald Trump has scored his first major legislative victory – a sweeping tax reform bill that has delighted Republicans but dismayed political opponents and bond investors who are worried by the outlook to a $1.5 trillion hole in federal finances. 

As today's Financial Times points out, the taxation overhaul has stirred fierce partisan disagreement that is set to dominate electoral battles in the US next year. Former presidential contender Bernie Sanders has already castigated the giveaway tax reform as "highway robbery" and "an utter disgrace". Which means that those of us who have been disheartened by the tedious news agenda and consequently dull markets of the past few weeks is that we can look forward to a much more interesting 2018, particularly in fixed income markets where Treasuries are already under very heavy pressure.

Meanwhile, there's little else of note in financial markets this session as the wind-down to the Christmas festive season gathers pace. Hong Kong, though, is an outlier after its local dollar plunged to a two-year low against the American version in response to an announcement by the regional central bank that it wouldn't be issuing extra exchange fund bills to mop up liquidity.

The economic release calendar is on the thin side yet again today but keep an eye out for US GDP and unemployment figures as well as Eurozone flash consumer confidence.

Market signals

Asian session

  • Asian shares were largely lower on a flat overseas lead
  • The ASX200 closed 0.2% down at 6060; the Kospi was 1.7% lower in late trade
  • China announced its eight economic aims for 2018 
  • The news followed the annual three-day Central Economic Work Conference 
  • The EU wants a transition period after Brexit to end no later than the last day of 2020
  • US stocks were flat overnight as the tax bill headed to the finish line 
  • The US Congress passed the biggest shake-up to the tax system in three decades
  • The Bank of Japan left monetary stimulus unchanged in the final policy meeting of 2017
  • NZ GDP rose 0.6% in the September quarter, in line with expectations
  • A UK MP resigned after an investigation found he lied over pornography claims
  • UK consumer confidence fell one point in December to minus 13 in the GfK index
  • Global IPO activity surged in 2017, making it the most active year since 2007: E&Y
  • Oil held gains near its highest close in more than two weeks 

Forex ahead

  • The USD had little enthusiasm following the passing of the tax bill
  • The NZD rose to US70.12¢ from US69.75¢ immediately before the GDP release

From the Floor

Duh! "The dollar fizzled in response to the tax bill, EURUSD hit a new high," says Hardy

Bad for bonds. "The key thing now is that US bonds are under massive pressure," says Hardy

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

Bond voyage
As 2017 draws to a close Althea Spinozzi considers events that could have an effect on next year's trends in the bond market and the opportunities they present for investors.

Carefree mood
Wall Street appeared not to care less about strong economic data or the tax reform bill. The three major indices closed on Wednesday with tiny losses in thin trading, writes Michael O'Neill.


Tax reform passed? Tick. Donald Trump got one Christmas wish granted after
the House and Senate passed the tax bill. Photo: Shutterstock 

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