Trump’s mission and only focus to define not only his overall presidency but to experience real and lasting economic growth is to pass the tax plan. So important is the tax plan to economic growth, markets and DXY without passage, the economic situation will remain more of the same.
More importantly, passage of the tax plan will hopefully lead other nations to scrap their Keynesian ways and adopt their own pro growth tax plans. The House Ways and Means Committee is working overtime to place final measures on the bill. Nothing is more important to growth than this tax plan. All the regulation, healthcare, Border and immigrant proposals are nothing in comparison to taxes. Problems exists however and its why Congressional Republicans and Trump must act with all due speed to ensure passage.
Legislation in the United States was designed not to pass but Trump currently has majorities in Congress so his time is good but limited. The first problem with Tax Bill passage is Senate Republicans in Lindsey Graham, John McCain and others oppose the plans. Many Republicans in the Senate are Democrats in Republican suits.
Next problem is Democrats are organizing by the thousands and thousands to march in the street to oppose taxes. A Tax decrease limits Democrat power. Yellen’s response to implications of Tax decreases on the economy was “I don’t know” and she was allowed to answer in this manner without follow up. Yellen obviously opposes tax decreases. A Tax decrease breaks the Keynesian control on the markets and allows the Supply Side System to reign one more. Trends and volatility will be back rather than a lost meandering and reactionary price.
Last opposition is news media. Human interest story after human interest story will appear how average joe will lose X benefits from tax decreases.
Lastly, markets are in the last quadrant of the 50 year mark and this time is most important because a new period and new market environment will materialize. What happens today will define what type of period will develop. Since 1694 and the BOE establishment, new periods marked great prosperity for just about 10 years.
EUR/USD opened the week at 1.0608 and here we are at 1.0530’s. Last post mentioned two lines 1.0664 and 1.0714. As long as price remained below then EUR/USD would travel lower. EUR/USD traveled lower.
Two lines today are now located at 1.0656 and 1.0708 and EUR/USD is falling. The bottom point today is 1.0531 and a vital vital break point. The significance is 1.0656 and 1.0708 are nothing except break points in order for EUR/USD to travel higher or lower. Both represent nothing in terms of ranges. Most currency pairs are in the same predicament.
Actual range breaks below are located from 1.0460 and 1.0366 then above at 1.0713 and 1.0814. What;s above for EUR/USD on bounce above 1.0556 is 1.0590’s.
Brian Twomey, Inside the Currency Market, btwomey.com