It’s what is missing that matters in the US tax plan

Lot’s of details but too much spinning

If you’re a US tax paying citizen or US tax attorney, you might be loving all these details coming out. If you’re just an FX trader looking in from the outside there’s two key points that are missing among the details.

No details on whwether the corp taxes are going to be phased or not
No details on repatriation amnesties/holidays or the like

These are two of the big market kickers because they determine whether we’re going to see massive flows back into the US, and/or a sudden big boost from firms not paying as much tax. One clue to why the news on this front might not be encouraging is in how they’ve spun the corp tax cut.

US corp tax spin

In typical political style, they’ve taken great lengths to show a). How bad things were/are, and b). How great this plan is. Usually such spin is the pre-cursor to some disappointment or letting some air out of the tyres, and that could point to something like a ‘phase in’, or lack of a repatriation holiday, which the market won’t like. As with all goverment tax plans, it’s what they don’t shout about that’s important as that’s usually where they hide the tax grabs that rob you blind.

Either way, The dollar has stopped falling for now. EURUSD tested the old broken support around 1.1690/1.1700 and has falolen back to 1.1670. USDJPY bounced from a 113.52 low to 113.72.

Next up in the headline target is Trumps Fed chair pick, widely expected to be Powell.