Dollar strength a good thing? Mnuchin pulled the Easter Bunny

Marcus Newton
April 20, 2017

Overall, the United States dollar index-which measure the American currency against six other major global currencies-was down roughly a quarter percent, to 100.33.

Mnuchin also acknowledged that one of the key elements in a tax overhaul plan being developed in the House of Representatives, a border-adjustable tax on imports that would give preferential treatment to exporters and to retailers and manufacturers who source goods and raw materials within the U.S., is facing resistance from within the administration. The low reached 2.1966% today.

The tax, which would subject importers to higher taxes than exporters or those that produce products in the USA for domestic consumption, could raise $1 trillion in revenue over 10 years. He said that there could be a difference of close to $2tn in revenues under different economic scenarios, adding that the difference between growth of 1.8 per cent and 3 per cent was "staggering" when compounded.

The yield could now fill the chart gap between 2.150 and 2.168 percent made just after the US presidential election, some analysts said.

Fed fund futures 0#FF: rose in price, now pricing less than a 50 percent chance of a rate hike in its June 13-14 meeting for the first time in about a month.

"Trump appears to have made a concession regarding China, a key player in the North Korean situation", said Makoto Noji, senior strategist at SMBC Nikko Securities, referring to last week's US Treasury's semi-annual currency report in which the Trump administration backed away from a key campaign promise and did not label China a currency manipulator. Focus will also be on the US - Japan dialogue.

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US Treasury yields moved higher, which was supportive for the dollar and lifted it off five-month lows against the yen.

"There are greater doubts now about large-scale fiscal stimulus under the Trump administration, and on top of that the US inflation numbers have been disappointing". The Aussie nudged up above $0.7600 to a two-week high on Monday on upbeat Chinese growth data.

Ahead of the first round of voting on April 23, the race looked tighter.

The stakes for investors are high, with two anti-European Union, anti-euro candidates - the far-right Marine Le Pen and the far-left Jean-Luc Melenchon - among the top four. North Korea had a failed missile test launch over the weekend, adding to regional tensions that have escalated in recent weeks as Trump has taken a tough rhetorical line with Pyongyang.

"SM - Absolutely. And I go back to saying it's a big part of the president's agenda to create economic growth".

Other reports by MaliBehiribAe

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