Analysts at Amplifying Global FX Capital, suggests that the shift in the Trump administration’s focus to tax reform may begin to rebuild strength in the USD and yields again, towards the highs seen early in the Trump administration.
“The deep involvement in Trump’s key economic advisors (Cohn and Mnuchin) gives this tax plan more gravitas. These people are credible, more so than the President.”
“Cohn and Mnuchin heavily emphasized that the tax overhaul is designed to boost growth, boost business investment, and improve the international competitiveness of US business. They said that these were the core principles of the tax overhaul that have broad agreement with Republicans in Congress.”
“Importantly, both advisors highlighted that they have been working on this plan for a long time and are working closely with Republicans in Congress. In contrast to the healthcare bill that has so far failed to be passed, the administration is deeply involved with Republicans in Congress that will ultimately need to come together to vote for a final tax overhaul.”
“Both advisors highlighted that coming to a final policy will require significant effort and will take some time, demonstrating a degree of humility lacking in the President and recognition that it will be a combined effort between the Administration and Congress.”
“Notwithstanding the considerable uncertainty over the final form and the timing of tax reform, there is scope for the financial markets to build in more confidence that something substantial will become law.”