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USD licks its wounds as US Senate passes tax bill

Summary:

  • US dollar tries to recover after a slump caused by reports related to Michael Flynn
  • US Senate passes the tax bill by a narrow majority pushing Trump’s sweeping tax system overhaul closer to implementation
  • Donald Trump expresses his willingness to negotiate changes to the tax bill
  • Bitcoin (BTCUSD on xStation5) plunged from under $12,000 to $10,500 due to a Telegraph’s report

The US dollar is trying to catch up its losses which occurred in the aftermath of reports related to Michael Flynn on Friday afternoon. A remedy came several hours later when the US Senate managed to pass the tax bill by a narrow majority (51-49) on Saturday morning where just Bob Corker was the sole Republican voting against the bill. President Donald Trump praised lawmakers and said that he was looking forward to signing the tax bill before Christmas. Notice that it could be a major step for the Republican Party bringing Donald Trump closer to achieving his first tremendous legislative victory during his term in office. Having said that, one cannot forget that now there is time to sort out details of both versions of the tax bill (Senate and House of Representative) in order to allow the President to sign the bill in upcoming weeks.

link do file download linkThe two versions of the tax bill differ but the GOP leaders hope that differences will be sorted out by Christmas. Source: WSJ

As you can see above there are some sticking points when it comes to the details of the tax bill put forward by the Senate and House of Representative. When those differences are solved and there is a common stance between the two chambers of the Congress, then the tax bill will be singed by Trump in order to take effect as soon as possible. In this respect it needs to underline the US President’s remarks voiced on Saturday when he said that he might be willing to negotiate changes to a significant portion of the tax overhaul, the corporate tax rate suggesting it could be a tough nut to crack to get the ultimate tax bill accepted by the two chambers.

link do file download linkIn effect, the US dollar got a boost shortly after the FX market opening. The greenback is by far the best performing currency in the G10 at the time of writing gaining the most against CHF, JPY and NZD. Having a brief look at the chart above one can spot that after a sudden decline on Friday the pair recovered substantially and it could be en route to 114.30. Source: xStation5

Meanwhile, Bitcoin managed to set its fresh high a notch above $11,800 albeit it plunged afterwards. On the surface there were no reports standing behind such a severe slump, however it could be attributed to a Telegraph’s article saying that "UK ministers are launching a crackdown on the virtual currency Bitcoin amid growing concern it is being used to launder money and dodge tax". As a result the price moved noticeably down, it recovered thereafter though.

link do file download linkBitcoin (BTCUSD) slumped out of the blue after trying to establish its new peaks. Source: xStation5

Looking beyond the above-mentioned markets let’s note that the Asian stock markets are trading mixed just a while before the close. The NIKKEI (JAP225) is losing almost 0.5%, however the Hang Seng (CHNComp) is gaining roughly 1%. On top of that gold prices are losing $5.7 or 0.45% while oil prices are sliding a bit as well.

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