The euro has posted slight losses in the Monday session. Currently, EUR/USD is trading at 1.1847, down 0.47% since the close on Friday. On the release front, Eurozone Sentix Investor Confidence dropped to 31.1, short of the estimate of 32.3 points. Eurozone PPI gained 0.4%, matching the forecast. In the US, today’s sole release is Factory Orders, which is expected to decline 0.3%. On Tuesday, Germany and the eurozone release services PMIs, and the Eurozone will also release retail sales. The US will publish US ISM Non-Manufacturing PMI.
Brexit is on the menu in Brussels. as Britain and the European Union appear close to moving to trade talks. Prime Minister May and European Commission President Jean-Claude Juckner meet later on Monday in Brussels, hoping to move closer to wrapping up the first phase of the talks. May has moved closer to the European’s demands on a divorce bill of around EUR 50 billion, but two items have yet to be resolved. One is the border between the UK (Northern Ireland) and Ireland, which is a member of the EU. The UK will clearly not remain in a customs union with the EU, but Ireland is insistent that there not be a hard border. The second issue is whether the European Court of Justice will have a role protecting European citizens in the UK. The EU is in favor of a role for the court, while many British lawmakers feel that such a move would impinge on British sovereignty.
All eyes are on Washington, as the Senate is set to vote on its version of tax reform. A vote was expected on Thursday night, but this has been delayed until Friday. Republican lawmakers are confident that they have the necessary votes to pass the bill, but with the vote expected along party lines, the results will be close. If the Senate does pass the bill, the stock markets and US dollar will likely respond with gains. The next step in the tax reform saga would be for the House and Senate to bridge the differences between the two bills and come up with a single version.
After some stumbling on Friday, the US Senate passed a tax reform bill on the weekend. The vote was a squeaker, with 51 Republicans voting yes, against 49 Democrats and 1 Republican. The Senate vote is a big win for President Trump, who wants to sign a tax bill before Christmas. The Senate and House must now reconcile their two bills, and the new uniform bill will then have be passed in both houses. Investors are pleased with the bill, and the US dollar has responded to the vote with broad gains.
