• USD and Wall Street move higher as the US Congress takes a step closer to the tax-cut reform
  • Bitcoin rallies to new record highs
  • Disappointment in Canadian data dampens expectations for another rate hike from BoC

The US Senate approved a budget blueprint for the 2018 fiscal year which enables the White House administration to pursue its tax-cut reform. Although there are still a lot of obstacles to be removed, the Trump Trade idea looks now more realistic which boosted USD and help Wall Street continue the rally. Moreover, Bitcoin reached new all-time highs and a package of data from Canadian economy weighed on CAD.

CAD lost ground after inflation and sales data. Inflation data was broadly in line with the consensus at +0.2% m/m and +1.6% y/y. What is more, average of 3 core inflation measures that are being watched by the Bank of Canada increased to 1.6% y/y as well, a good sign. However, we cannot be that positive when it comes to the retail sales. The headline saw a decline of 0.3% m/m while the consensus was looking for an increase of 0.5% m/m and the ex-auto measure saw a plunge of 0.7% m/m, missing the market consensus by a full percentage point.

Major European equity markets have begun the day widely higher predominantly on the back of US revelations that the US Senate approved of a 2018 budget resolution which is the first step towards delivering sweeping tax cuts. Even as we are still a long way off from getting the final agreement which will allow implementing tax cuts to the real economy, the story is decisively conducive to the US dollar and the global stock market as well.

 After Bitcoin and other digital currencies erased their losses on Thursday, volatility subsided. Bitcoin was trading slightly lower in the Friday’s morning losing approximately 1%, but in the afternoon the cryptocurrency set new record highs jumping towards 6000 USD handle.

The Japanese snap election will take place this Sunday after Japan’s PM Shinzo Abe decided to dismantle the parliament at the end of the last month in order to reinforce his grip on power. Even as there are little chances to be caught off guard, it’s worth looking at anyway as it could carry some ramifications for the JPY and the NIKKEI (JAP225 on xStation5) as well. 

We near to the end of this trading week, however, there is still one major event ahead of us. FED’s chair Janet Yellen will give a lecture on monetary policy since the financial crisis at half past midnight. Nevertheless, the market reactions to her speech will occur as soon as Monday.