The euro has started the week with gains. Currently, EUR/USD is trading at 1.1791, up 0.36% on the day. On the release front, Eurozone Final CPI improved to 1.5%, matching the forecast. There are no key indicators in the US. On Tuesday, Germany releases Ifo Business Climate and the US publishes Building Permits.
The Trump tax plan continues to wind its way through the corridors of Congress, but Republican lawmakers can see the light at the end of the tunnel. On Friday, the House and the Senate reconciled their tax bills. The uniform bill now goes to both branches, where it is expected pass by a slim margin, as all Democrats plan to vote against the bill. Crucially, two Republican senators who were opposed to the bill have now lent their support to the bill. The legislation is the first major overhaul of the US tax code in 30 years, and would represent a major victory for President Trump, who has campaigned vigorously for the legislation and wants to sign it into law before Christmas.
There were no surprises from the ECB on Thursday, as the Bank stayed on the sidelines and maintained interest rates at a flat 0.00%. ECB President Draghi sounded optimistic about economic conditions in the eurozone, noting that that ECB projections were “going in the right direction”. Draghi added a key caveat, stating that “an ample degree of monetary stimulus remains necessary”. The ECB raised its forecasts for growth and inflation, but this clearly wasn’t enough to coax the cautious Draghi to signal another taper of the Bank’s ultra-loose stimulus program. Some policy makers favored signaling a change in policy if inflation continues to move higher, but the majority favored staying the course, which means the ECB will continue buying bonds till September 2018 (or later) and will keep interest rates at record lows even longer.
