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Markets Flat as US Congress Passes Tax Reform

No Sign of “Buy the Rumour, Sell the Fact” Trading After Tax Reform Bill Passes

US equity markets are expected to open relatively unchanged on Thursday, a day after posting small losses despite tax reform successfully making its way through Congress in time for the holidays.

With tax reform having been priced in over the course of the year, including a late push in recent weeks as details of the bill became clear and progress through Congress was made, it’s evident that it is already priced in. While we’re not yet seeing signs of corrections following – in buy the rumour sell the fact fashion – markets may struggle for positive catalysts over the next week or so.

Catalan Looks to Elect New Parliament But Crisis May Go Unresolved

Catalonia will vote to elect a new parliament on Thursday, a couple of months after the previous administration was sacked, with some members jailed and others opting for self-imposed exile in Belgium. It is hoped that the election will resolve the issues of independence and show that the majority of Catalans do not in fact favour independence from Spain. Unfortunately, it’s very unlikely to be so straightforward.

The topic of independence is a very divisive issue in Catalonia and it remains quite evenly split between those wanting it and those not. There’s a good chance that this election will produce a hung parliament which will far from resolve the crisis and even a small majority for independence parties will be unlikely to see them get their wishes.

CAC Almost Unchanged as Markets Eye Catalan Election [1]

BoJ Warns Against Speculation of Monetary Tightening

The yen is trading a little lower today after the Bank of Japan left monetary policy changed at its final meeting of 2017 – a result that surprised no one – while re-emphasizing its commitment to its ultra-accommodative stance. There had been some speculation that the central bank may be tempted to take its foot off the gas soon as the economy is performing well and inflation is no longer in negative territory.

Governor Haruhiko Kuroda stoked this further at a speech in Zurich last month when discussing the potential for low interest rates to be contractionary, which some viewed as a signal that the central bank may consider tightening in fear of such a scenario. As it turns out, Kuroda was not implying such an action and claims the BoJ remains committed to achieving its 2% inflation target, which weighed a little on the yen.

There is still some work to be done [2]

Economic Calendar


For a look at all of today’s economic events, check out our economic calendar [4].


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.

Craig Erlam

Craig Erlam [9]

Senior Market Analyst, UK & EMEA at OANDA [10]
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

Latest posts by Craig Erlam (see all [9])