USD was generally lower on a “buy the rumor, sell the fact” response to the passing of the US bill (although it hasn’t passed entirely yet). There may also be some belated realization that this bill won’t necessarily boost the US economy that much but it will cause the US budget deficit to increase.
The question now is, what comes next for the US? US President Donald Trump is now promising a “soon to be submitted infrastructure plan” for “roads, bridges, tunnels, railways (and more).” The budget that he submitted back in May 2017 included a $1tn plan for private/public infrastructure investment. Now, with the Congressional Budget Office estimating that the tax cuts would increase the deficit by $1.45tn over the next ten years, it remains to be seen how much money is left for infrastructure spending. It may be that disappointment over the lack of any direct fiscal stimulus could dampen sentiment for USD.
NZD did not perform well. Prices fell at the dairy auction yesterday, on top of which the trade deficit for November 2017 was more than double what the market has expected (NZD -1.193bn vs NZD -550mn expected, NZD -843mn previous). GBP fell too after Britain’s Cabinet met yesterday for the first full discussion of what kind of an outcome it wants from the Brexit negotiations.
