Despite the fact that stock market investors have expressed a positive prediction for tax reform thanks to themajor indexes record increase, the Federal policymakers anticipate a short-run boost from that tax reform for the U.S. economy. They predict the growth will go back to nearly 2% by 2020, and will not increase to 3% as the administration predicts.
The Dollar struggled within two days as from Monday, while the investors doubted the U.S. tax reformation impact on the economy. Investors were of the view that the tax overhaulwould not boost the economy enough for efficient influence on growth or inflation, as well as on the future interest rate decisions of the U.S. Federal Reserve.
The Tax Reform
Senate Republicans passed a bill appealing for the reformation of USA tax systemon Wednesday morning and sent the plan back to the House of Representatives. The Senate rules enforced them to make last-minute amendments.
As the CNBC reported, three of the bill provisions adopted on Tuesday didn’t meet the Byrd rule requirements. The rule regulates the provisions types which the Senate may consider under the reconciliation.
The Senate approved the bill by a 51-48 vote, thus, it’s sent back to the House of Representatives to be approved finally, and after that, it will be sent to the President to sign into law. Republicans hope it all will be done by the end of the current week.
Three important U.S. economic reports took place on Tuesday. The Building Permits was the major one, they came in at 1.30 million units, which is better than 1.27, but is less than previous 1.32 million units.
The Current Account of the USA improved to -101 billion as well, what is better than the -116 estimated and the previous -124.
The third report was about Housing Starts which jumped 1.30 million units, up from 1.26 million units. The traders expected 1.25 million unit increase.
Goldand Crude Oil
Gold prices reached their highest level as from December 6 before the House of Representatives voted on the reform and caused the setback of the market. Despite that, the gold prices remain steady because of a struggling dollar and a short-run U.S. equities setback.
Brent and West Texas Intermediate crude oil futures closed higher on Tuesday, while the Forties pipeline outage in the North Sea and the OPEC-led production cuts supported Brent. Along with that WTI futures increased thanks to Brent futures’ increase and expectations of the US crude inventories to fall for the fifth week. Because of the concerns over US production rising, gains were limited for both futures contracts.