Summary:

• USD is still the strongest currency in G10, however GBP gains alike
• US bond yields are on the rise being a support of the greenback but German bund yields increase as well
• CAD little changed as traders await crucial macroeconomic reports

Today is all bout the US tax reform which has already stolen the show being a boost for the greenback as it’s the best major currency across the G10 space. Let us recall that the US Senate voted 51 to 49 in favour of a budget blueprint in a Thursday night session that could pave the way to a tax revamp which was a critical point during the Donald Trump’s presidential campaign last year. Even as now the 2018 budget resolution has to be submitted to the House of Representative, it’s been enough to help the USD climb higher. In turn when the budget resolution is agreed between the Senate and the House then it will be passed to the House Committee on Ways and Means where congressional tax writers are drafting the bill.

As for now, the US dollar is up a bit more than 0.2% while the Japanese yen and the NZ dollar are among the most laggards. The former could lose momentum due to improving risk appetite as well as the snap election which will take place this weekend. The latter is still plummeting following the yesterday’s announcement from the NZ First Winston Peters as he chose to back up the Labour. On top of this, the British pound is gaining ground as the EU agreed to kick off internal preparations to the second round of Brexit talks.

Better moods across the global equity market have contributed to the sell-off seen in bonds. At the time of writing, the US 10Y yield is trading nearly 5bps higher on the day, the German 10Y bund yield is picking up the same, while the UK10Y yield is rising a bit more than 5bps.

Major European equity markets have begun the day widely higher predominantly on the back of US revelations that the US Senate approved of a 2018 budget resolution which is the first step towards delivering sweeping tax cuts. Even as we are still a long way off from getting the final agreement which will allow to implement tax cuts to the real economy, the story is decisively conducive to the US dollar and the global stock market as well.

After Bitcoin and other digital currencies erased their losses on Thursday, volatility subsided. Bitcoin is trading slightly lower in the Friday’s morning losing approximately 1% but it could increase its losses in the nearest future as a technical analysis doesn’t seem to be supportive of it. However, before we move to the chart let’s say a few words about the latest CNBC survey.

The last day of this week is likely to be dominated by the Canadian dollar at least in terms of macroeconomic reports. The CAD will get two crucial releases concerning inflation and retail sales, both could have a massive impact on the Loonie, this is especially true when we take into account that the BoC meets next week. On top of this, there will be the real estate data from the US and some central bank speakers.