The Aussie dollar is one of the major loser among currencies
Investors are largely expecting the ECB would enlighten the markets with more details
The countdown is on for the introduction of the US tax bill
Investors over in Europe are cautious as the Asian indices posted a narrow session. The Aussie dollar is one of the major loser among currencies because of the poor economic data reading. The consumer price index data was much softer than anticipated and printed the reading of 1.8 percent versus the forecast of 2 percent- a number which made investors to push the currency to its lowest level since July.
Between today and tomorrow, the event which is going to get the most amount of spotlight would be the upcoming European Central Bank’s meeting. Investors are largely expecting that the bank would enlighten the markets with more details on the tapering of their quantitative easing program. Just how much the cautious tone would be by the president of the European Central Bank will remain the key point. The bank is still far off from achieving its inflation target of 2 percent. We expect the bank to adopt a very balanced tone tomorrow and it would remain very accommodative.
Over in the US, it is all about the US tax reform and the spat between president Trump and the Republicans remain the attention. The countdown is on for the introduction of the tax bill and House Republicans are expected to make an announcement by November 1st. The record highs for the stock market over in the US is fuelled by two elements; the US tax reforms and the sturdy quarterly earning reports. The rally would lose its mojo if any of these starts to lose steam.
Of course, the hopes around the US tax reforms are supporting the dollar index but the other major pillar is the choice for the next chairperson of the Federal Reserve bank. President Trump yesterday discussed his top two candidates with the Senate Republicans during his lunch meeting. John Taylor, the economist at the Stanford University, remains the top choice.
Talking about Sterling, nothing is working for the currency. Currently, it is mainly the negative sentiment around Brexit negotiations and uncertainty over the Bank of England’s decision on its interest rate which is keeping the currency in the dark spot. It is trading at its worst level in nearly two weeks and the picture doesn’t seem be brightening up anytime soon.
