Overpromise and underdeliver seems to be the modus operandi of the Trump Administration. Edging closer to the 100 days mark, Gary Cohn and Steve Mnuchin unveiled a “once in a generation” tax plan. It came five days after the idea was first announced.
The ideas in the plan seem quite ambitious indeed. Significantly lower taxes could make a huge difference in the economy and in the US debt pile.
However, the plan lacks details. After nearly one hundred in office that followed some 70 days in transition and lots more time on the campaign trail, the press received a one-pager. A dearth of details is not a first for the Trump team, but still a disappointment for markets that were hyped by the news.
And there is another problem: passing it. As we have seen with Trump-care, the Republican party is quite divided. There are moderates and extremists, caucuses and lots of special interests. Also, Donald Trump and Paul Ryan haven’t proved to show the best of their leadership.
Will they succeed with the tax plan? Early indications show that they will first need to iron out the details.
USD slides
The US dollar was rising against some currencies ahead of the hyped announcement. And when the one-pager came out, the trend reversed.
- EUR/USD dipped from a double-top to low support, and now it is back to 1.09, the middle of the range.
- USD/JPY was nearing 112 and retreated under 111.50.
- GBP/USD moved higher in range
- AUD/USD fell to the lowest in Trump’s presidency and is now rebounding.
- The embattled Canadian dollar, suffering from Trump’s timber tariff threats, is also recovering.
Here is how the stall in the greenback’s rise looks on the dollar/yen chart:
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