Global Forex November 8th - After the plunge on Monday, the dollar bulls seem to have picked up again overnight. The dollar rose against a basket of currencies on Tuesday (November 7) as investors refocused on the US and eurozone monetary policy deviations. The US dollar index rose 0.17% to 94.92, slightly lower than the three-month high of 95.15 hit at the end of last month. However, a series of news rumors surrounding the tax reform still make it difficult for the dollar bulls to feel completely at ease. According to US media reports, four people familiar with the draft legislation said that the US Senate Republican leaders are considering postponing the implementation of major corporate tax cuts for one year. This news led to a sharp fall in the US dollar exchange rate at the beginning of the market in San Francisco.
It is worth mentioning that today (November 8th) will be the first anniversary of the 2016 US presidential election. On this special day, Trump, who holds the "American first", will also visit China for the first time. Trump will pay a state visit to China from November 8 to 10. The economic and trade and North Korea issues are expected to be the focus of Trump's visit to China. It is reported that the Trump administration attaches great importance to this trip to China and led a high-profile delegation. Most of the accompanying companies come from the energy and bulk commodities industries. Trump's latest remarks on relevant sensitive topics are expected to be the focus of the market again.
Will the corporate tax reduction be postponed? Trump tax reform news four times the market shocked undecided!
With the gradual clearing of the trend of the world's major central banks in the past few weeks, before the end of this year, the success or failure of the Trump administration's tax reform will undoubtedly become the biggest "burst point" in the financial market. The latest news shows that the progress is not optimistic - according to the Washington Post on Wednesday, four people familiar with the draft legislation said that the US Senate Republican leaders are considering postponing the implementation of major corporate tax cuts for one year. This change will reduce the corporate tax rate from 35% to 20% in 2019, instead of the 2018 proposed by the House Republican bill.
The Washington Post reported that the delay in tax cuts would save $100 billion, but may encounter resistance from Donald Trump. In addition, there are significant differences in the personal income tax regulations.
The US House of Representatives issued the first draft tax reform plan last week. If passed, it will be the largest tax reform in the United States since the 1980s. Republican lawmakers began amending the US tax reform proposal on Monday, but the Democratic Party pointed out that the proposal lacked a popular tax cut, proving that the proposal was a middle class.
The adjustment of corporate tax is conducive to small businesses, but the government's income has been greatly reduced, and the passage of the bill may be subject to resistance from both houses of Congress. UBS had previously pointed out that it is difficult to get enough votes to support it, whether in the House of Representatives or the Senate. Trump previously said that he hopes that the final bill passed by both Houses of Representatives will be submitted to the President's Office before Thanksgiving.
Affected by the delay in the implementation of the tax reform bill, the US dollar index fell rapidly at the beginning of the session on Wednesday, hitting a low of 94.77. In addition, the dollar against the yen also plunged to 113.65. It is worth mentioning that the US dollar index once rebounded on Tuesday, and New York rose 0.17% to 94.92.
Bloomberg quoted a foreign exchange trader in Asia as saying that due to reports that the US plan to lower corporate tax rates may be delayed, leveraged accounts to sell dollars/yen in Tokyo. The trader said that stop-loss orders were gradually higher at the low of 113.54 on November 2. Sell ​​orders for exporters and macro accounts have reappeared between 114.50/60.
Forexlive, a well-known foreign financial website, wrote on Wednesday that if the US tax reform bill cannot be implemented as scheduled, the dollar is expected to weaken. Internationally renowned investment bank Morgan Stanley also said that the dollar's gains may be nearing completion, as most of the good news surrounding the tax reform has been digested, and the market ignores the risks associated with the tax reform bill being approved in Congress. . The bank's strategists expect the dollar shorts to come back, because if the draft bill is caught in the quagmire of Washington politics, the current position will provide room for a sharp exchange rate correction.
In addition, analysts at Commerzbank are also skeptical about whether the bill can meet high market expectations – even if it is approved by enough parliamentarians.
German Commercial Bank analyst Ulrich Leuchtmann said: "In order to prevent a substantial increase in new debt, the tax reform plan has eliminated many exemptions. But this is the trigger for political battles. At the end of the battle, we may still see significant taxes. Reform is nothing but the current plan."
Trump's first visit to China has attracted much attention - the topic of economy, trade and North Korea has become the core of two major concerns!
Whether Trump’s long-planned tax reform plan can be successfully cleared in Congress is becoming more and more confusing, and Trump’s own trend will now attract market traders’ attention. According to the established schedule, Trump will pay a state visit to China from November 8th to 10th. Analysts pointed out that this visit is the result of a positive interaction between China and the United States in the period of policy and diplomacy. It will have an important and special impact on the direction of the major adjustment and change of Sino-US relations in the international order.
The two heads of state of the two countries will introduce Sino-US relations into the "Xi Jinping-Trump era" and officially open a new cycle. At the same time, this visit was held shortly after the conclusion of the 19th National Congress of the Communist Party of China. It explained to China the development strategy of the new era and the reform and development strategy for China, the world’s largest developing country and the United States, the most powerful country in the Western world. Important practical significance.
Some analysts said that Trump will make a macro-positive statement on Sino-US relations and the two countries through this visit, but the issues that he really cares about and strive for substantive results are two: economic and trade and North Korea nuclear, two issues They are all deeply concerned about the domestic politics of China and the United States.
It is reported that in addition to the accompanying personnel of the government department, Trump's accompanying delegation to China has a special feature: a luxury business delegation composed of 29 American companies. Including Goldman Sachs Group CEO Lauder Bellank, Boeing Commercial Aircraft Group President and CEO Kevin McAlister, General Electric Company Vice Chairman Zhuang Ruisi and others. These CEOs, led by Commerce Secretary Ross and US Trade Representative Wright Heze, conveyed the message of hope to establish a long-term US-China bilateral economic relationship.
According to Bloomberg News, more than 100 US companies applied to join the delegation, and the US Department of Commerce finally selected 29 companies. Why are these 29 companies? If you look closely at the list of companies, you can find that these 29 companies are mainly energy and manufacturing. According to the US media, cooperation in the energy field will be one of the priorities of Trump's China trip. US Ambassador to China Branstad also mentioned in an interview yesterday that the two heads of state will witness the signing of a series of documents covering manufacturing, energy and many other fields.
Beyond economic and trade, the nuclear issue on the Korean Peninsula is undoubtedly a major focus. Since the beginning of this year, the heads of state of China and the United States have spoken on several occasions to communicate on the DPRK nuclear issue. The New York Times believes that Trump’s Asian team has brought a full set of national security teams to show that, in the eyes of some analysts, the White House is making greater efforts to find regional pressure on North Korea to deal with North Korea’s nuclear weapons and Ballistic missile project.
In the past few months, North Korea has vigorously promoted the research and development of nuclear power technology, conducted the sixth nuclear test, and intensively tested long-range ballistic missiles to achieve a huge technological leap. It is increasingly close to having an intercontinental ballistic missile capable of carrying nuclear warheads to the United States. The ability, the United States' assessment of North Korea's "nuclear threats" tends to be urgent, and the voice of the removal of the DPRK and the default of the North Korean nuclear proposition "communicate." Under the complicated situation, the Trump administration is hesitant, neither dare to fight nor want to talk. In addition to constantly sending signals of military intimidation to the DPRK, it can only continue to pressure China to cooperate with the United States to control North Korea and impose a stricter blockade on the DPRK. Coordinating the so-called "strain preparation" and transferring some pressure to China. The more statements made by Trump during the visit to China on the DPRK issue will undoubtedly attract attention.
It is worth mentioning that US President Trump warned North Korea during his visit to South Korea on Tuesday that he intends to use the full military power of the United States to stop any attacks. However, he also called for Pyongyang’s "agreement" with a more moderate attitude than in the past. End the nuclear deadlock. This statement once raised the market risk appetite and boosted the dollar's rebound.
According to industry insiders, due to the heavy economic data and international financial events in the United States, foreign exchange traders will continue to pay attention to the US tax improvement exhibition and Trump's trip to China, which may become a key factor affecting the short-term trend of the foreign exchange market.
Editor: Xiaoxiang
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