"U.S. equities and the dollar sold off on Thursday as the U.S. Senate indicated that it could take up to 2019 in order for a tax plan to be fully ratified, moreover, the government lawmakers were suggesting that the final policy (when brought into law), would not resemble Trump’s outline plan whatsoever
. The tech heavy listings in the NASDAQ index witnessed the largest falls as did the Russell index, given they have the most to benefit from a tax cut, which would cut the headline rate of corporate tax from 35%, to 20%. The dollar also slumped versus its major peers, as without the plan in place, investors will also doubt the FOMC’s flexibility to raise rates in December and early 2018 and the Fed’s ability and motivation to begin engagement with a policy of quantitative easing. Trump came in to power promising various policies to increase economic performance; whilst he doesn’t have the power to directly affect monetary policy given that it’s the Fed’s remit, other than an appointment for Fed chairperson, he’d hoped a fiscal policy of (primarily) increased infrastructure spending and tax cuts, would provide a major stimulus to the USA economy, both in terms of the famed “trickle-down effect” and improved employment numbers, with increased wages. Fundamental news from the USA, concerned the initial jobless claims and continuous claim numbers, which both missed forecast marginally. Whilst wholesale trade sales beat forecast, coming in at 1.6% growth for October. The U.S. dollar fell by 0.6% versus yen, 1.0% versus euro, 0.2% versus sterling and over 1.2% versus the Swiss franc.
European equity markets sold off sharply during Thursday’s trading sessions, despite encouraging data emerging from the Eurozone and an extremely optimistic economic report being delivered by the ECB, concerning the current state of the European Union. The latest German import and export data beat forecasts, with exports not falling as expected, down only -0.4% in September, whilst Germany’s trade balance and current account surpluses, both beat forecasts. The euro rose versus its the majority of its main peers; the U.S. dollar, sterling and yen, but whipsawed violently, through a wide range of bearish and bullish conditions, versus the Swiss franc, throughout the trading sessions. Sterling recovered some of its recent lost gains versus several of its peers, as the political turmoil at the heart of the U.K. government temporarily calmed, due to a fresh ministerial appointment. However, the Brexit situation took a bad turn for the U.K. government, as members of the E.U. cast fresh doubts on the UK’s offer for E.U. citizens to remain in the U.K. once the exit process is finalized and without such agreement in the E.U.’s favor the U.K. will obtain no trade deal. In a quiet day for fundamental economic calendar news, the housing body RICS published a house price balance survey reading of 1 falling from 6 in September, which represents one of the worst readings for U.K. house prices, since the recession years of 2009. Sterling rose versus the U.S. dollar throughout the day, versus the majority of its other peers the U.K. pound was either flat, or ended the day down. Versus the Swiss franc the currency fell, as did the majority of currencies on Thursday, as the franc’s safe haven appeal reappeared. In other related news; Chinese CPI came in ahead of forecasts, rising to 6.9% YoY and 1.9% MoM. Australian data concerning home loans, investment loans and the value of loans all fell significantly, directly effecting the value of Aussie dollar versus its peers. From Japan the ECO watchers surveys, both current and outlook, beat the forecasts by some distance."