• The dollar shook off initial weakness to edge higher against a basket of other major currencies on Monday as traders braced for the resumption of deliberations on the U.S. tax plan and the confirmation hearing for Federal Reserve Governor Jerome Powell as the central bank’s next chair.
The dollar index, which measures the greenback against six rival currencies, was up 0.12 percent at 92.893, after hitting a nine-week low of 92.496 earlier in the session.
Worries about potential delays in the implementation of tax cuts and the possibility of proposals being weakened have weighed on the dollar in recent weeks.
• President Donald Trump was to meet with Senate Republican tax-writers on Monday at the White House to scope out an end-game strategy for sweeping tax legislation, ahead of a crucial vote on the Senate floor that could come as early as Thursday.
• Jerome Powell, the nominee to chair the Federal Reserve, defended the Fed’s use of broad crisis-fighting powers in remarks prepared for his Tuesday Senate confirmation hearing, positioning himself as an extension of the central bank policies of current Chair Janet Yellen and her predecessor Ben Bernanke.
”We must retain the flexibility to adjust our policies in response to economic developments,“ Powell said in the remarks. ”We must be prepared to respond decisively and with appropriate force to new and unexpected threats to our nation’s financial stability and economic prosperity.
“I will do everything in my power to achieve those goals while preserving the Federal Reserve’s independent and nonpartisan status that is so vital to their pursuit,” Powell said, referring to the Fed’s Congressionally mandated goals of promoting both maximum employment and low and stable inflation.
The one exception: easing some post-crisis financial regulations. While Powell said he agrees that the new requirements on banks have made the financial system safer, he wants to look for ways to ease the cost of regulation if it can be done safely.
“We will continue to consider appropriate ways to ease regulatory burdens while preserving core reforms,” Powell said in the statement.
On current monetary policy, he said, “We expect interest rates to rise somewhat further and the size of our balance sheet to gradually shrink.”
• Dallas Federal Reserve Bank President Robert Kaplan on Monday made his clearest case yet for an interest-rate hike next month and more to come in 2018, saying that waiting too long to tighten policy could increase the risk of recession.
“I believe it will likely be appropriate, in the near future, to take the next step in the process of removing monetary accommodation,” Kaplan said in an essay staking out his policy views ahead of next month’s Fed meeting. “This should be done in the context of an overall strategy of removing accommodation in a gradual and patient manner.”
• Fed's Dudley: FOMC is very united on appropriate policy path
- Fed thinks US economy is "pretty much" at full employment.
- Not concerned that inflation is a little below Fed target.
- Expects inflation to rebound and economy to continue at above trend pace.
- Job market tightening more and a bit more wage growth.
• Minneapolis Federal Reserve Bank President Neel Kashkari, who dissented both times the Fed raised interest rates so far this year, on Monday signaled he may do so again in December when the Fed is widely expected to deliver a third rate hike.
“Because inflation is low, I am seeing no reason to tap the brakes on the economy,” Kashkari said in a Town Hall event at Winona State University in Minnesota and broadcast via the Minneapolis Fed’s website. A rate hike would be expected to slow the economy by reducing incentives for borrowing, investing and hiring.
• New home sales in the U.S. rose to their highest level in a decade in October. The metric rose 6.2 percent to 685,000 units, compared to the 6 percent fall forecast in a Reuters poll and above the revised 645,000 figure for September.
• The latest U.S. Senate version of a Republican tax bill, strongly backed by President Donald Trump, would balloon the federal budget deficit and hurt poor Americans more than first estimated, congressional fiscal analysts said on Monday.
Congress’ Joint Committee on Taxation (JCT) estimated the Republican bill would expand the $20 trillion national debt by $1.4 trillion in a decade, a potential worry for the dwindling number of Republican fiscal hawks in Congress.
The Congressional Budget Office (CBO), another nonpartisan research unit of Congress, said poor Americans would be hurt more than originally thought by the bill, largely because it would gut a key provision of the Obamacare healthcare law.
• A political crisis that has left Ireland on the brink of a snap election deepened on Monday as the deputy prime minister resisted fresh calls to resign and uncertainty over her future cast a shadow over a Brexit summit next month.
Ireland will play a major role at the meeting, telling EU leaders whether it believes sufficient progress has been made on the future of the border between EU-member Ireland and the British province of Northern Ireland.
The pressure on Deputy Prime Minister Frances Fitzgerald of Varadkar’s Fine Gael party mounted on Monday following the release of fresh documents over her disputed handling of a legal case involving a police whistleblower.
• Brent futures LCOc1 ended down just 2 cents at $63.84 a barrel while U.S. crude CLc1 settled 84 cents, or 1.4 percent, lower at $58.11 a barrel.
U.S. oil prices fell more than 1 percent on Monday, easing from two-year highs on prospects of higher supply from a planned restart of the Keystone crude pipeline and uncertainty about Russia’s resolve to join in extending output cuts ahead of this week’s OPEC meeting.
• On Friday, Russia said it was ready to support extending an output cut deal. Still, Russia has not given a timeline, and on Monday there were signs Russia may find it hard to comply.
• Oil markets will rebalance after June 2018 at the earliest, an OPEC working panel concluded last week, OPEC sources said on Monday, signaling the need to extend existing production cuts well into next year.
• Analysts at Barclays expect OPEC to keep output limits for another six or nine months. However, they said this was widely expected, so prices still might fall after the OPEC meeting.
Reference: Reuters, Forex Live, CNBC
Thai
Eng