Comments from CBA's morning note on their outlook for influences on the US dollar this week, in brief:
Politics:
- This week the USD is vulnerable to some modest upside risk if the US Congress (House of Representatives and Senate) manage to agree on a unified tax bill
- The House and Senate must reconcile their respective tax bill this week if they plan on getting a unified tax bill signed by President Trump before year-end
- Congress must also pass this week a short term spending bill (raise the debt ceiling) to avoid a partial US government shutdown on 22 December
- Wednesday's Alabama special Senate election will be of interest
- Republican candidate's lead in the polls is small
- if Senate Republicans do not hold on to the seat in Alabama, their Senate majority will shrink which may complicate the passage of a unified tax bill
Thursday's FOMC meeting and Summary of Economic Projections:
- The FOMC is widely expected to raise the target range for the federal funds rate by 25bp
- In our view, the median interest rate projections (the 'dot plot") will still imply three 25bps interest rate increases in 2018 (to 2.125%) and two 25bps interest rate increases in 2019 (to 2.75%)
