Global Markets Rise

Treasury chief Steven Mnuchin said this week that markets could see a correction if US lawmakers fail to pass the president’s tax-cut measures, while People’s Bank of China governor Zhou Xiaochuan warned of “excessive optimism” and a possible plunge in prices.

But Trump’s promise to pass the legislation moved a step closer late Thursday when senators agreed a budget resolution that unlocks a procedure allowing Republicans to push through such measures without the need for Democrat help.

Trump hailed the vote as “an important step in advancing the administration’s pro-growth and pro-jobs legislative agenda”.

Expectations the tycoon’s tax cuts and big spending plans would boost the economy were one of the drivers of a months-long global markets rally that kicked off after his November election, though a series of White House crises and legislative setbacks pared those gains.

While the controversial proposals still have a long way to go before being passed, the news spurred Asian markets to life after a plodding start to the day, while the dollar strengthened against the yen, euro and pound.

“The budget still has to also pass the House, but near term, it should be supportive for the dollar,” Shinichiro Kadota, a senior foreign-exchange strategist at Barclays Securities Japan in Tokyo, told Bloomberg News.

“Senate passage of budget was a step required for budget reconciliation to advance tax reform.”

And Stephen Innes, head of Asia-Pacific trading at OANDA, said: “It’s likely not too late to jump on this party bandwagon as global equity markets continue ratcheting higher… or the Trump trade bandwagon for that matter.”

Tokyo ended marginally higher as a weaker yen helped reverse early losses to see the Nikkei to its 14th straight gain, matching its best run since 1961.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes