Market Snapshot – Dollar is the Darling of the Markets

Dollar Rebounds

The dollar has begun to strengthen across the board and what started as a trickle seems to have become a flood as the dollar strength sneaked upon the markets. Like in any rebound and change of trend, no one recognised the change of trend when it all began and the traders begin to realise about the rebound only when the trend is well and truly set. As for the dollar, the conditions were ideal for a rebound as it was clearly oversold and we also saw the economic data from the US getting better by the day. All that the dollar needed was for some support from the Fed and it got that a couple of weeks back when the FOMC announcement made it clear that the Fed was looking at another rate hike later in the year. This was the confirmation that the dollar bulls needed as they set about buying the dollar in a large way and this has helped the dollar to rebound.

Focus on Tax Reforms

The focus of the day would continue to be on the dollar as the US President Trump is all set to announce tax reform plan which has been in the pipeline for quite some time now. This has helped to lend some support to the dollar and also to the US stock markets as one of the proposals being discussed is to cut the corporate tax from 35% to 20% and if this happens, it should bring cheer to the corporates. It remains to be seen how he plans to push this through the Senate but so far, the market seems to be liking it.