Stocks, dollar rise on Fed, US tax plans; bonds fall

Bloomberg

US stocks advanced as President Donald Trump prepares to lay out his tax-cut plan, while the dollar extended gains and bonds fell after Federal Reserve Chair Janet Yellen boosted expectations for an interest-rate rise in December.
The S&P 500 Index was near record levels in early trading. The Bloomberg dollar index headed for a six-week peak and Treasury yields jumped to the highest in two months as traders digested Yellen’s warning against tightening “too gradually.” The greenback’s resurgence pressured the euro, giving a lift to stocks in Europe, with almost all major country benchmarks in the green. Emerging-market stocks headed for a fifth day of declines, the longest streak since May 2016.
WTI crude rose to its highest level since April after data showed US stockpiles dwindled last week. Safe havens including gold, the yen and the Swiss franc extended declines as North Korea dropped off the radar for the time being.
While the market may not be fully convinced of the Fed’s willingness to raise rates again in December, the possibility and the prospect of corporate tax cuts is something traders can’t ignore. Though Trump’s tax plan marks only the start of what could be a brutal fight in Congress, stocks were cheered by a proposal that may allow companies to write off capital expenditure for five years. The dollar received an extra leg up from the prospect of capital inflows as companies take advantage of a proposed one-off repatriation tax.
Trump heads to Indiana to help unveil what he called a “very comprehensive, very detailed” framework for tax legislation. St. Louis Fed President James Bullard, Minneapolis Fed President Neel Kashkari and Fed Governor Lael Brainard are among US policy makers speaking today. US data on GDP and personal spending on Thursday will provide further clues as to the potential Fed policy path. On Thursday the Bank of England hosts the “20 Years On” conference in London, beginning with remarks from BOE Governor Mark Carney. The euro-area inflation rate may have accelerated a touch to 1.6 percent in September from 1.5 percent but the core will probably remain at 1.2 percent. The data is out on Friday.
The S&P 500 Index was up 0.4 percent at 2,506.92 as of 9.40 am in New York. The Stoxx Europe 600 Index advanced 0.5 percent to the highest since July. The UK’s FTSE 100 Index rose 0.4 percent. Japan’s Topix index slid 0.5 percent at the close in Tokyo.

Bearish euro signals build
Bloomberg

The euro’s miserable month may not be over, if trading patterns are anything to go by.
The common currency hit an almost six-week low versus the dollar on Wednesday. While the day’s move may owe more to greenback strength than regional concerns, it follows losses in the wake of the German election and sets the euro up for its first losing month since February.
Technical analysis of the currency’s trading charts offers little comfort on its short-term prospects: First, the euro’s 233-monthly moving average has capped its advance for the second time in as many months. A look at the chart underlines how strong this gauge has proved in the past. After failing to sustain a move above $1.20 at numerous attempts, the euro headed lower and has dropped below a support at $1.1850.