The Trump administration unveiled its highly-anticipated tax reform plan yet dollar pairs ended the session mostly unchanged and U.S. stock indices closed in the red.
- Canadian headline retail sales down 0.6% versus projected flat reading
- Canadian core retail sales down 0.1% versus estimated 0.2% decline
- U.S. crude oil inventories down by 3.6M barrels versus 1.1M estimate
- Plan for “Biggest Individual and Business Tax Cut in American History” released
Trump tax reform plan – Classic over-promise and under-deliver! Many had been expecting “something phenomenal” on taxes ever since Trump took office so it’s hardly surprising that the actual announcement fell short of these high expectations.
Most of the deets included in the tax proposal had already been talked about one way or another in the past few weeks, including a planned corporate tax cut to 15% and reducing the current seven tax brackets to just three to simplify things. The goal of this is to “grow the economy and create millions of jobs” and provide tax relief mostly to middle-class American families.
Other plans include eliminating the tax breaks that benefit the wealthiest taxpayers, repealing the Alternative Minimum Tax and death tax, implementing a territorial tax system that benefits American companies, and having a one-time tax on trillions of dollars held overseas.
Apart from that, the Trump administration also indicated that it plans on holding listening sessions with stakeholders throughout May and to continue working with lawmakers to develop “a plan that provides massive tax relief, creates jobs, and makes America more competitive-and can pass both chambers.”
- S&P closed 0.05% down to 2,387.45
- Nasdaq closed down to 6,025.227
- Dow 30 closed down 0.10% to 20,975.09
Downbeat reports from Canada – Economic data from Canada turned out mixed as the headline retail sales figure for February showed a 0.6% slide instead of the estimated flat reading while the core reading printed a 0.1% dip versus the expected 0.2% decline.
Components of the report revealed that the drop in headline reading was mostly due to lower sales in motor vehicles and parts dealers, as well as gasoline stations. In fact, sales were down in five out of 11 subsectors, including food and beverage stores and among building material and garden equipment.
In addition, the Canada Mortgage and Housing Corporation (CMHC) reported that there’s strong evidence of trouble in the local property market. In particular, it noted that Toronto is undergoing sharp housing price acceleration, which could lead to overheating or a bubble. On a less downbeat note, it did say that there were green shoots in Vancouver where a 15% tax on foreign buyers has been imposed since August last year.
Major Market Movers:
CAD – The Loonie was one of the weakest performers for the day as it was dragged down by the CMHC report and talks that Trump is gearing up to sign the EO to challenge NAFTA.
USD/CAD advanced from 1.3579 to 1.3650, CAD/JPY slipped from a high of 82.40 to a low of 81.40, EUR/CAD is up from a low of 1.4739 to a high of 1.4888, and GBP/CAD popped up above the 1.7500 handle.
Watch Out For:
- Tentative: BOJ decision and press conference
Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.
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