POLITICS AND THE U.S DOLLAR DOMINATE FINANCIAL MARKET TRADING
DOLLAR AND TAX
The U.S dollar index moved to its highest trading level in over a month, as the Trump administration finally announced its ambitious tax-reform. The proposed reform would slash taxes for individuals and businesses in America, and constitute the most sweeping changes to the U.S federal tax code in decades.
Finacial markets reacted overwhelmingly positively to the proposed reforms, with U.S stocks markets and the U.S dollar moving sharply higher. The U.S dollar index broke above its key 200-week moving average, and surged well above the 93.00 mark.
GOLD AND YELLEN
The price of spot gold fell to its lowest level in over a month as investors moved away from the yellow metal, after strong technical selling and hawkish comments from the Federal Reserve Chairwomen Janet Yellen.
In the early trading week, the price of spot gold began to fall below the key $1,290 support level, as buying interest for gold began to wane above $1,300. Janet Yellen's comments furthered accelerated selling in spot gold, as she defended the central bank's measured pace of interest rate increases.
SINGLE CURRENCY FALLS
The euro fell sharply this week, as the German Federal election result sparked worries amongst investors, as Angela Merkel's CDU party failed to win an overall majority in German parliament. The euro declined sharply against the U.S dollar, British pound and Japanese Yen, as financial markets priced in the new uncertainty surrounding German politics.
By mid-week, the EURUSD pair had fallen to its lowest trading level since September 18th, hitting 1.1717. The EURGBP pair also declined sharply, with the pair breaking through key moving average support, with price-action moving closer to the key 0.7740 mark.
JAPANESE ELECTION CALLED
This week, Japanese Prime Minister Shinzo Abe called a snap general election, and dissolved the lower house of Japanese parliament. Abe reasoned that he was seeking a fresh mandate to overcome "a national crisis" amid rising tensions coming from Pyongyang.
The market reaction to the news was minimal, although volatility in the Japanese Yen and Nikkie225 index will likely increase as voting day draws closer. The actual date of the Japanese election is widely speculated to be set for the 22nd October.