The Japanese yen (JYN) depreciated for the fourth week in a row last week.
The British pound (FXB) depreciated more than 2.0% against the US dollar for the week ended October 6, 2017.
It’s possible that political pressures could keep the euro under pressure as the economic calendar remains light in the Eurozone.
Bond traders have few reasons to be happy this week. Chances for tax reforms continue to increase with the US Senate moving on a path that would mean only 51 votes could be required to pass the bill.
The US Dollar Index (UUP) closed at 93.64 last week, a gain of 0.82% and the fourth consecutive weekly rise. The dollar didn’t react to a loss of 33,000 jobs in September.
For the week ended October 6, 2017, the S&P 500 index (SPY) closed at 2,519.36, recording gains of 0.80% for the week and the sixth straight record close.
Stock market volatility remains at lower levels despite an uptick in global uncertainty. The war of words with North Korea, political uncertainty in Spain, and elections in Japan are keeping global uncertainty alive.
The announcement of the GOP tax reform plan added to the pressure on bond markets.
US-based companies pay, on average, a 27% tax on income.
Equity markets across the globe appear to welcome the idea of a US corporate tax cut.
The path to President Trump’s tax reform plan could be troubled by the prospect of a ballooning deficit because the plan offers generous tax cuts.
The Trump administration’s central idea is to reduce the taxes paid by corporations and simplify the federal tax code—despite the projected effects on the deficit.
The US Dollar Index regained strength in September and rose for four consecutive trading weeks. However, the US Dollar Index opened lower this week.
At 6:15 AM EST on October 9, the FTSE 100 Index is trading at 7,508.50—a fall of 0.19%. The iShares MSCI United Kingdom (EWU) fell 0.14% on October 6.
On October 9, China’s Shanghai Composite Index opened at the highest levels traded since January 2016 and moved lower as the day progressed.
There are several important economic indicators coming up next week, including the following.
The United Kingdom’s manufacturing PMI stood at 55.9 in September 2017, compared to 56.9 in the previous month. The PMI figure was below the preliminary market expectation of 56.4.
Japan’s manufacturing PMI stood at 52.90 in September 2017, compared to 52.20 in August 2017. The PMI figure beat the preliminary market estimation of 52.5.
According to a report by Markit Economics, the final Eurozone manufacturing PMI (purchasing managers’ index) improved strongly in September 2017.
According to a report by Markit Economics, Spain’s manufacturing PMI rose to 54.3 in September 2017, compared to 52.4 in August.