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Trump to Confirm Next Fed Chair; Market Awaits Further Details on Tax Reform

Published November 2, 2017
  • As expected, the Federal Reserve left US interest rates unchanged while setting the stage for its next rate hike in December; the Fed mentioned strong US economic growth and an improving labor market as catalysts for further monetary tightening.
  • The US dollar remained strong throughout the day, however, did not make any substantial gains as investors largely priced in this telegraphed result from the Fed.
  • According to sources familiar with the matter, US President Donald Trump is likely to nominate Jerome Powell as Federal Reserve Chairman later today; Powell is currently a Federal Reserve Governor and is set to speak at an event unrelated to his potential nomination later this morning.
  • Janet Yellen’s term as Federal Reserve Chair will expire in February 2018; investors will look to see if Trump’s eventual pick for the new Fed Chair will carry on Yellen’s recent hawkish tone.
  • Republican congress members are expected to release a proposal for their tax bill later today after a one-day postponement; US lawmakers are seeking to offer $6 trillion in tax cuts over 10 years.
  • The US dollar has experienced strong gains from the early success of this bill as Trump looks to score a major win in overhauling US tax codes for the first time in 31 years; these gains for the greenback stemmed largely from the proposal to cut the corporate tax rate from 35% to 20%.
  • Stephen Poloz cited NAFTA renegotiation as a major hindrance for Canadian corporate investment in the near future; an economic data release showed that the pace of growth of Canadian manufacturing slowed to a nine-month low.