The US dollar ended the day flat yesterday and continues to trade sideways this morning. Looking at news, the dollar remains highly sensitive to tax-related updates. Trump has urged Congress to end the healthcare mandate and cut taxes for earners in the highest tax bracket. The House Rules Committee is scheduled to set up a floor debate this Wednesday, with a vote expected on Thursday. The Senate vote is expected to take place next week at the earliest. We covered our thoughts regarding the issues with the current tax bills in a thought piece yesterday. Looking at bond yields, surging interest rates on 2-year bonds have so far had a limited impact on the currency. Since mid-September, 2-year US bond yields have increased from around 1.25% to 1.68% today.
USD/JPY is currently trading just above 113.650. EUR/USD was flat yesterday and remains flat this morning. The exchange rate is currently just above 1.1680. The pound was down sharply yesterday, with GBP/USD currently above 1.310.
This week’s economic data includes the consumer price index, retail sales numbers and other figures. On Tuesday, we’ll see producer prices. On Wednesday we’ll get the most important figures for the week including both retail sales and CPI numbers. On Thursday we’ll see jobless claims, capacity utilization, Philly Fed manufacturing and industrial production for October. Finally on Friday, we’ll see the NAHB Housing Market Index, and housing/building starts. Last week, jobless claims missed expectations.