The announcement of Donald Trump's long awaited tax reform has been welcomed by the economies together with Treasury yields and the dollar higher. So is the ”Trump exchange” back on again? The Republicans are proposing a decrease in the corporate tax rate from 35 percent to 20% together with modifiions to the personal tax rings, simplifying them from 7 bands to just 3 that includes reducing the top rate of taxation from 39.6 percent to 35%. The program also includes a one to encourage US firms to bring gains held abroad back. The announcement does though have its critics, saying that it favours higher earners and big corporations. As ever with this President, the secret will e getting the legislation through Congress, and by no way a guarantee that is with healthcare floundering. Despite this, the current market is optimistic and Treasury yields are currently pushing at higher due to the effect it could have on inflation and growth. It's intriguing to remember that the 2s/10s spread has now widened on the announcement to a 1 month high. This is strengthening the dollar once again as return differentials are pulling from the favour of the dollar. This is also currently driving gold lower once again, whilst equity markets are somewhat more positive. Within the coming days and weeks, a steepening yield curve and strengthening dollar will find out the market's belief in the return of this ”Trump exchange”, and it will all be based on the prices done in Congress, but first signs are there.

Wall Street turned higher into the close last night using all the SP 500 0.4% higher at 2507, although Asian markets were mixed to carefully higher also (Nikkei 0.5 percent) and European indices will also be taking off the lead Wall Street and revealing mild historical gains. In Currency Market, the dollar strength continues to outstrip the majors, although the move is slightly less pronounced today, but the Kiwi is feeling the strain again after the RBNZ held rates stable night. In commodities, gold is being hit by the dollar strength, but the overnight losses are not quite so intense going to the session that is European. Oil is currently continuing its consolidation following a pair of EIA inventories yesterday.

Dealers will be looking out for the Bank of England's Carney talking, German inflation, along with the final reading of US Q2 growth. The hints from the Bank of England has just driven sterling and the market will then look from Governor Mark Carney when he speaks at a summit at 0915BST for hints over policy moves. German inflation is published throughout the morning by the many states, although the countrywide German CPI reaches 1300BST and is predicted to stay in 1.8 percent for the year. The last reading of US Q2 GDP growth is currently at 1330BST and will be expected to be confirmed in 3.0 percent (which is how the next reading came in). The remarks from FOMC's Stanley Fischer (centrist voter) will also be of interest at 1515BST.



Chart of the Day -- EUR/GBP

Euro/Sterling has been in decline for the last few weeks, but the transfer hastened lower as the hawkish hints from the Bank of England began to indie a move towards tightening monetary policy could come sooner than anticipated. The bears had been held up by A consolidation at the correction, but the move appears now to be gaining traction once again. A close below #0.8770 completes a small range break and opens for 130 pips of suggested disadvantage in the coming week. This comes as a term of assistance of an uptrend of almost two years is being seriously tested. Previously all of the conversation was of parity but today sterling is testing support that on a violation would be a 3 month low, as the support at #0.8740 is being jeopardized. A close below #0.8715 would start drawback for the June low at #0.8650. The momentum signs are placing pressure on the disadvantage with the RSI stuttering around 30, all the bear candles racking up, the Stochastics falling in bear territory and the lines in fall . Intraday rallies are presently being marketed to, together with hourly momentum negatively configured and lower highs being abandoned under the key resistance now at #0.8900. There is now a near term ”market zone” between #0.8770/#0.8815.



EUR/USD

With three tolerate candles in a row that the outlook has decisively shifted. The completed top pattern under $1.1820 implies a retreat at least to get a test of the vital support at $1.1660 and potential to $1.1550. This comes with all the momentum signs that continue to deteriorate. The RSI is now below 40, although the Stochastics are under 20 and the MACD lines are accelerating lower towards neutral. Rallies are presently an opportunity to market on the euro, together with the neckline of this top an place of a pullback rally that would be another chance. There is a sell-zone now at $1.1820/$1.1860. The graph shows that were hourly configured momentum together with unwinding moves on the RSI discovering resistance around 50, whilst Stochastics and the MACD lines have been positioned. First assistance of yesterday's low at $1.1715 is unlikely to last as the bears eye $1.1660 that's a vital support.



GBP/USD

The bearish candles are now racking up as the corrective move gathers momentum. Yesterday's decisive close below $1.3450 completed a small top that implies $1.3250 plus a test of this crucial August breakout at $1.3265 is increasingly likely today. The momentum signs continue to deteriorate in inverse, the RSI along with the lines now ready to cross lower with the Stochastics. There is first minor support at $1.3330 which may hold up the selling strain but with lower highs and lower lows now forming on a daily basis the disadvantage pressure is growing. The graph shows any unwinding moves towards 50 about the RSI or towards neutral about the MACD lines are a chance.



USD/JPY

The bulls are in full flow today for the dollar as a second completed bullish candle has closed over 112.70. As momentum remains strong, the early move now has continued. The RSI remains in the high 60s, higher is being accelerated by MACD lines along with the MACD lines are strong above 80. Breaking out over 112.70 means the sector is on for additional gains using a mini-range upside down implying 125 pips of gains towards 114.00, whilst the key July high at 114.50 is well within sight again. Corrections are a opportunity to buy today, together with the hourly graph showing a near term buy zone in 112.35/112.70. The support at 111.45 is now crucial near term.



Gold

Two strong negative candles have once more turned into the outlook decisive from the favour of the bears today. The support at $1287.60 has been decisively breached and the market is now back to test the August support zone $1267/$1278. The concern is that the momentum signs are bearishly configured revealing bear positioning that is clear, although the RSI is falling under 40 and MACD lines will also be falling sharply to neutral. A violation of $1267 would start the high low within the uptrend. Rallies are definitely now being viewed as a opportunity to market with $1287.60 now a foundation of overhead distribution near term. Any rally that fails under $1300 will probably be regarded as a selling opportunity.



WTI Oil

Although gas stocks were higher than anticipated, the larger than anticipated drawdown produced the EIA petroleum inventories blended and should remain supportive for its breakout about the petroleum price. On a technical basis, the industry then continues to consolidate the strong breakout over $50.50 that has started the upside towards a test of the $53.75 key April high. Momentum indiors remain firmly configured and any escape to the breakout at $50.50 will probably be thought of a opportunity to buy. This comes with the recent 4 week uptrend support now coming in at $50.65. The graph continues to observe the RSI MACD lines and supported about 50 which reflects momentum configuration. First support is now at $51.45 plus a transfer above Tuesday's high at $52.45 would re-open the upside down.



Dow Jones Industrial Average

The market looks to be positioning for the next breakout move as a positive session has halted a run of three negative closes. The candle was not decisively bullish and suggests that the buyers were still not ready to muster a move for a different new large at 22,420. Despite this though, momentum signs remain firmly configured and a ramble back has allowed the possibility to be renewed. The vital buy zone between 22,039/22,179 is still over this five month uptrend channel's support that's now at 21,960. The graph shows there is a corrective ramble rather than anything and corrections remain a opportunity to buy. It should only be a matter of time before we see that the Dow breaking fresh high ground again.