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Tax reform hopes support bullish dollar sentiment
US dollar short bets were cut by almost two-third falling to $0.66 billion from $1.9 billion against the major currencies during the previous week, according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to November 14 released on Friday November 17. Tax reform hopes supported bullish dollar sentiment amid mixed economic reports.
The Senate unveiled its tax plan which proposes lowering corporate tax cuts to 20% in 2019 instead of 2018 as proposed by House Republicans. At the same time the House Ways and Means Committee passed the Republicans’ bill which proposes cutting corporate taxes to 20% from 35% and repeals the estate tax. Economic data were mixed: the producer price index for October remained steady at 0.4% over month when a decline to 0.1% increase was expected. On the negative side consumer sentiment deteriorated in November as reported by the University of Michigan and US federal budget deficit for October rose $17 billion from the same period last year to $63.2 billion dollars. As is evident from the Sentiment table, sentiment deteriorated for all major currencies except the British Pound and euro . And the Canadian and Australian dollars together with euro remain the three major currencies held net long against the US dollar.
CFTC Sentiment vs Exchange Rate
| November 14 2017 | Bias | Ex RateTrend | Position $ mln | Weekly Change |
| CAD | bullish | negative | 3718 | -269 |
| AUD | bullish | negative | 3357 | -117 |
| EUR | bullish | negative | 12472 | 91 |
| GBP | bearish | positive | -373 | 384 |
| CHF | bearish | negative | -3536 | -395 |
| JPY | bearish | positive | -14984 | -943 |
| Total | 655 |
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