Trump makes Thanksgiving Promise
In his Thanksgiving speech to the American People yesterday, President Trump made a promise of “big fat tax cuts” although the when, not the what, is more likely to exercise his supporters’ minds.
The market was heavily influenced by the U.S. Holiday yesterday with currencies trading in narrow ranges. The dulling of expectation for the fiscal reform bill as well as the prospects for further hike in interest rates has left traders feeling a little deflated as they continue to be expected to accept platitudes and promises from a President who is long on bluster, short on delivery.
The dollar index has been “bumping along the bottom” for a few days now as support at 93.00 holds. The Euro, which is the main constituent of the index” continues to suffer from the political situation in Germany and is providing a little support. It traded between 93.29 and 93.08 yesterday as traders took stock, concerned about the lack of liquidity.
There is a degree of scepticism building about just how significant the fiscal reform will be and there is a danger that the “flagship of Trump’s first year” could prove far less influential than had been hoped.
The Boy who cried “wolf”
Traders are now starting to see through the ambiguous comments of EU leaders and negotiators when it comes to Brexit progress. Their comments, designed to show other EU members that the U.K. is to blame for how slow the progress has been, carry less and less weight with every disappointment.
Were Jean-Claude Juncker’s hopeful comments yesterday another attempt to show that the EU is trying to be accommodative? Only time will tell. The President of the European Commission said that there has been intense negotiation over the past few days and a decision over the progress to stage two of Brexit negotiations is imminent. The ambiguity of that statement is contained in thebfact that there is no inkling of what that decision may be.
Theresa May will visit Brussels today to deliver her offer of an increase in the U.K.’s budget contribution to forty billion euros. May has somehow managed to convince the more hawkish of her Cabinet Ministers of the necessity for an increased offer, although there has been no leak of just how many concessions she has had to make to secure their support.
The pound drifted lower yesterday as it lacked drivers for any significant move in the thin holiday affected market. The budget is being viewed with a little scepticism as the Treasury has been accused of lowering its growth expectations to unreasonable levels substituting its worst case as its best case.
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Market winding down as the last week of November approaches
Next week will be the final week of “normality” for a month as liquidity starts to dry up and traders try to hang on to what they’ve got in terms of profit as the year draws to a close. What have we learned in 2017 and what can we expect in 2018? Well, President Trump has been a constant. Long on rhetoric and short on delivery, he has found the transition from campaign to Government difficult, but so have the American public.
Brexit has been all we expected. EU intransigence and U.K. whimsy have led to a perception that a hard Brexit or even no-deal scenario becomes ever more likely. If we don’t get the agreement to move to stage two in the next few days, the decision over which has been promised, then the hawks will be out in force and relations will sour even more.
Angela Merkel faces a tough time bringing her prospective coalition partners back to the negotiating table. It seems that her reluctance to lead a minority Government stems from the fact that over every piece of policy and legislation, a compromise will be needed, and Mrs Merkel is not the best at compromising, just ask the Greeks!
