What to Look out for Today – Gasoline’s Up, Trumps Tax Reform and USD Strengthens

Gasoline has seen its highest price in the last 2 years – as refineries in Texas, including the US’s largest, shutdown due to Hurricane Harvey. The fossil fuel jumped up to $2 a gallon after almost a quarter of US refinery output – more than 4 million barrels a day - completely ceased. This caused oil prices to transversely go down, due to lowered US demand. Analysts around the world are expecting this effect to hold for a few months, some even expect a longer-lasting effect. The total speculated economic damage from Hurricane Harvey is said to reach $160 billion.

After the Trump administration’s failure to reverse or restructure the colloquially known Obama-care, markets are very apprehensive whether the new presidency’s tax reform will be able to make it through the Senate. This is also compounded by the fact that the policy seeks to lower corporate taxes from 35 to 15, as lawmakers speculate that 25 percent would be challenging. According to the Trump administration this should boost and grow the job market, helping in turn the middle class – which sounds eerily similar to trickle-down economics, which inefficacy has been proven in past years and could even potentially be damaging to the economy at large.

Safe havens seem to continue dropping as the USD stabilized, gaining 0.016% against the JPY trading 110.4825. USD also a very meager gain against CHF (in the area of 0.002%) and is currently trading 0.9638. Today’s economic calendars has significant data releases including Germany’s Unemployment Change which came in under expectations at -5K instead of -6K but still a substantial drop from the previous -9K. The German unemployment rate stayed stable at 5.7%. The EU’s CPI (YoY) for August is also scheduled at 09.00 (GMT) – which is speculated to increase from the previous 1.3% to 1.4%. The US Core Personal Consumption Expenditure – Price Index (YoY) for July is slated to be released at 12.30 (GMT), which is forecasted to fall slightly to 1.4% from the previous 1.5% the month to month report for July for the same index is expected to remain unchanged.

This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.

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