USD Comments

From the FXWW Chatroom: USD strength to come, as fiscal policy is back in focus
The USD has traded on a firmer tone after US President Donald Trump mentioned that he would make corporate tax announcement over the next two to three weeks. Since the start of the year, the USD gave back some ground amid concerns of the Trump’s administration’s ability to implement aggressive fiscal spending plans. As expansionary fiscal policies come back in focus, they will leverage the existing acceleration of US growth even if, as we expect, only a third of the planned programme is implemented. Markets have been also focused lately on potential trade policies such as the implementation of a border adjustment tax, which could raise the long-term equilibrium (FEER) value of the USD. We maintain our view that risk reward for USD longs has improved considerably. Our BNP Paribas Positioning Analysis indicates that the market is currently short USD, down from +22 in the beginning of this year. Therefore, there is a lot of room for new long positions to be added.
HSBC: Trader comment
Trump’s comments yesterday, were in my opinion, quite relevant as it shows the tax policy remains at the fore. Market expectations for tax reform centered around the Q3 timeframe, so to get more detail in the coming weeks is a welcomed development.
Almost as important as the announcement itself – was the reaction to it.  USDJPY jumped 35 points and continued for another 100 points, which suggests both that the market is underweight Dollars, and that the market still wants to believe in Trump-flation.  As such, I think that Dollar strength continues today. Big resistance has been broken at 113.60, and we need to close above that to inspire the bulls. That being said,  market will be hesitant to carry significant risk over the weekend.
For today,  I remain long Dollars and will add on dips toward 113.20.  Resistance sits at 114.00-10 and 115.00.
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