10/02/2017 - Trump Releasing New Tax Plan

USD

The Dollar strengthened yesterday after comments from U.S. President Donald Trump that he would be releasing his "phenomenal" tax plan in the next few weeks. Investors have been eagerly awaiting details on Trump's campaign trail which promised to inject the U.S. economy with large-scale fiscal stimulus through additional spending and tax cuts. Trump has said his administration will be announcing "something phenomenal in terms of tax" over "the next two or three weeks".

St. Louis Federal Reserve Bank President James Bullard said yesterday that U.S. interest rates are likely to remain low throughout 2017, with no clear direction as yet on whether President Trump’s administration's policies will spark higher inflation or growth. Bullard said that he feels that the Fed will only need to raise interest rates once this year, and indicated that this is unlikely to happen at the March meeting as there will not be enough information about the new administration's possible spending and tax plans at that point.

GBP

Two days after giving a strong signal that she is on the verge of voting to increase interest rates for the British economy, it has been announced that MPC committee member Kristin Forbes will be leaving her role after a three year term. As she has consistently been one of the more hawkish members, her departure could be the start of a shift in interest rate policy. Last August, she voted against quantitative easing, although she did vote to cut rates at the time. Treasury will start looking for a replacement for Forbes "shortly", according to a statement from the Bank's governor Mark Carney.

Chancellor Philip Hammond announced that Charlotte Hogg has been appointed as the Bank of England's new deputy governor for markets and banking, replacing Minouche Shafik, who is leaving the Bank at the end of February. Her role will cover responsibility for the Bank's bond-buying programme.

Key Announcements

09:30 – GBP : Manufacturing Production month on month, expected at 0.3% against a previous 1.3%

15:00 – USD : Prelim UoM Consumer Sentiment, expected at 97.9 against a previous 98.5