The US President Trump will address Congress at the end of the month and will reveal the long awaited details on how he wants to reform the US economy, starting with his tax reform. It is expected that other topics will be touched as well – his plans to increase defense spending, large investments in infrastructure, as well as how he plans on dealing with the existing health care system.
Apart from the Preliminary Q4 GDP for 2016 and the Consumer Confidence Index, the market offers few distractions from Mr. Trump's speech. Data for the US GDP for the final quarter or 2016 showed signs of continuous growth and strong momentum, pushing the economic measure up to 2.1% from the previous 1.9%. This would be the highest increase since Q3 of 2014, should the data be confirmed. The Consumer Confidence Index, however, is less optimistic. It's expected that it would decrease as expectations over employment, wages and the business climate were not met.
The President will no doubt shake the markers. The expected topics include:
- His focus on heath care. It's not secret that Donald Trump is not sympathetic towards his predecessor's project – the Patient Protection and Affordable Care Act (or better known as Obamacare). His plan includes repealing and replacing it while still retaining similar funding for health protection.
- The decision to bolster military spending. Expected amount is 54 billion$, which will have to come from other areas of the US budget like most of the agencies and foreign aid.
-Spending big on infrastructure. The POTUS have pledged to spare 1 trillion $ for his infrastructure plans.
- Tax plans will come after he has cleared up the situation with the new health care plan. It's plan is to reduce the burden on the middle class and bolster exports with more taxes being paid by importers.
The end result could suggest a FED dollar hike in the short turn. It is expected that the dollar inflation will rise.
Across the pond, there are uncertainties regarding the EUR and the GBP. While GBP still suffers from post BREXIT uncertainty, a new Scottish independence referendum might even bring it lower.
As EUR has gained some ground against the Greenback, Greek economic problems and Euro skepticism in France and the Netherlands still plagues the Union's currency.
The JPY was looking strong at the start of the week with traders hoping to capitalize on it's strong trend, but it has entered a period of volatility, which might not end soon as news on the core CPI, consumer index and unemployment rate are expected on Friday, with information that doesn't show any obvious change in either direction.