Playlist: Canada

Show less
From the Floor: After Harvey, beware of Irma — #SaxoStrats
06 September 2017 at 8:10 GMT
The week ahead in macro — #SaxoStrats
Kay Van-Petersen
10 July 2017 at 9:46 GMT
What’s next for wheat after surge — #SaxoStrats
Ole Hansen
06 July 2017 at 10:28 GMT
Quarterly Outlook video: Queasy and uneasy
John J Hardy
05 October 2016 at 12:05 GMT
Look for US PMI this week: Van-Petersen
Kay Van-Petersen
23 May 2016 at 10:13 GMT
Risk of BoJ intervention increasing: Hardy
John J Hardy
11 April 2016 at 12:53 GMT
ECB to lead cavalcade of central bank meetings: Hardy
John J Hardy
07 March 2016 at 12:18 GMT
Van-Petersen: Why uncertainty may be a golden opportunity
Marie-Louise Møller
15 February 2016 at 10:18 GMT
Video / 10 November 2017 at 9:00 GMT

From the Floor: Dollar rally sputters as Trump tax reform stuck

  • USD dead in the water as tax reform getting stuck in Congress
  • Economic data next week key to whether USD rally can resume: Hardy
  • A close above USDJPY 114 could point to a rally for the pair next week: Hardy
  • Interest rates up, led by European rates
  • Oil headed for a fifth weekly gain, driven by Saudi uncertainty
  • Gold a touch firmer on USD weakness
  • Uranium ETF surges on news of Cameco's production cut
 By John Acher

The US dollar rally has stalled as the Republican tax-reform effort has become increasingly mired in difficulties in Congress.

"We’re seeing the dollar dead in the water,” says Saxo Bank's head of FX strategy, John J Hardy, adding that there was really no new impetus to sell the dollar, but the rally had just gone flat. (Read also Hardy's latest FX Update here on TradingFloor.)

Senate Republicans refreshed their version of the tax reform bill on Thursday, proposing a one-year delay in Trump's corporate tax cut, while reinstating some tax breaks for middle-class wage-earners.

"I’m wondering if this tax reform becomes an albatross around the Republicans’ necks going into the 2018 elections," Hardy says.

Economic data next week -- including US October CPI and retail sales -- will be key to whether the dollar rally can resume, Hardy says.

Meanwhile, market interest rates, led by European rates, rose "quite a bit", on Thursday.

USDJPY faces a "line in the sand" at 113, whereas a close above 114 could point to a new rally for the pair next week, Hardy says.

Norwegian headline CPI, which fell to 1.2% year-on-year from the previous 1.6%,  was lower than expected, keeping the NOK under pressure, with the 9.43 are now of interest in EURNOK.

In the commodities markets, crude oil remains supported by the ongoing Saudi Arabian purge of its leadership, which has created the kind of geopolitical risk that makes traders reluctant to book profits for fear that there could be another price spike ahead, says Saxo Bank's head of commodities strategy, Ole Hansen.

"It is driving oil to a fifth weekly gain," Hansen says, adding that the focus to the downside for Brent crude is $62/barrel and then $60/b.

Gold has traded a touch firmer as the dollar has weakened on concerns that the US tax reform may be delayed due to  conflicting proposals between the Senate and the House of Repreentatives, Hansen says.

And the lack of upside momentum for gold presents a risk of long liquidation below $1,280/oz, while a break of $1,288/oz to the upside would be needed to trigger further gains, he says.

The Global Uranium ETF (URA:arcx) jumped 12% on Thursday after news that Cameco (CCO:xtse), the worlds biggest producer, will temporarily cut 10% from global output due to weak prices, Hansen says.

URA exchange-traded fund
Source: Saxo Bank

Uranium has lost 70% of its value since the Fukushima disaster in 2011. "Finally suppliers are starting to react to these very weak prices," Hansen says.

John Acher is a consulting editor at TradingFloor.


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail