Yahoo Finance Dollar Boosted by Optimism Over U.S. Tax Reform
A shift in momentum sent December U.S. Dollar Index futures to its highest level in nearly a week on Monday. A sell-off in the Euro was mostly behind the move. The single-currency weakened on political risks fueled by German Chancellor Angela Merkel’s failure to form a three-way coalition government. The greenback was also supported by optimism over U.S. tax reform.
The USD/JPY also rose on Monday in response to increased demand for higher risk assets. In Japan, the trade surplus jumped to JPY 0.32 trillion, beating the forecast of JPY 0.21 trillion. Japan’s trade surplus improved in October, buoyed by strong demand for Japanese exports.
U.S. Economic News
In the U.S., the only report released on Monday was the Conference Board Leading Index. It gained 1.2% above the forecast of 0.6%.
In other news, Fed Chair Janet Yellen announced Monday that she will leave the Federal Reserve after her successor is sworn in. Yellen’s four-year term as head of the central bank comes to an end in February, and she has the option of staying on as governor.
“As I prepare to leave the Board, I am gratified that the financial system is much stronger than a decade ago, better able to withstand future bouts of instability and continue supporting the economic aspirations of American family and businesses,” she said in a letter to Trump. “I am also gratified by the substantial improvement in the economy since the crisis.”
U.S. Stock Indexes
The major U.S. stock indexes jumped on Monday as Wall Street began the holiday-shortened week with renewed bets tax cuts would keep the economic expansion moving forward.
IBM and Verizon helped boost the Dow Jones Industrial Average. The S&P 500 Index was driven higher by strong gains in telecommunications stock. The NASDAQ Composite closed just below its record closing high.
Equities received a boost from the strong CB Leading Indicators report and expectations that tax reform in the U.S. will be completed in a timely manner.
Gold
Gold futures tumbled over 1.50% on Monday, giving up all of Friday’s gains on pressure from the rising dollar. The catalysts behind the rally were expectations for a U.S. rate hike in December and perhaps as many as three in 2018. Traders also reacted to a surge in demand for higher-yielding assets.
Crude Oil
U.S. West Texas Intermediate and international-benchmark Brent crude oil closed lower on Monday as cautious investors continued to pare positions ahead of next week’s OPEC meeting. The rising dollar may have also put a dent in demand for crude.
In other news, Nebraska regulators approved a route for TransCanada Corp’s Keystone XL pipeline through the state on Monday, lifting the last big regulatory obstacle for the long-delayed project that U.S. President Donald Trump wants built.
This article was originally posted on FX Empire
