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Senate Floor Approved Tax Bill; Reconciliation Next Print E-mail
ONG Focus | Insights | Written by Oil N' Gold | Mon Dec 04 17 00:41 ET

Extending the late recovery last Friday after the Senate floor's passage of its version of the tax reform bill with a 51-49 vote, US dollar jumped across the board today. Currently trading at a 2-week high against Japanese yen, the greenback got dumped last Friday amidst new developments of the "Russia gate". Former White House national security advisor Michael Flynn agreed to testify against the Trump administration dealings with Russia, after admitting he had lied to the FBI. The news had sent USDCHF to the lowest level since mid-October before recovery last Friday. Crude oil prices retreated on profit-taking with the front-month WTI and Brent crude oil contracts slipping -0.72% and -0.56% at the time of writing this report. Gold has dropped about -0.3% as US dollar rallied.

With the Senate passing the bill, the next thing is that the House and the Senate would do reconciliation of their versions in a conference committee. Indeed, the reconciliation would be discussed amongst House and Senate Republican members, as no Democrats has voted for either version in both House and Senate. We expect the final agreement would be more like the Senate version and the House would likely be willing to compromise so as the get the bill passed as soon as possible. After the final conference report has been filed, the House and Senate would vote to approve it again before sending it to President Trump for signature.

While the market would be closely watching any update on the tax bill reconciliation, the week ahead would be a busy one with RBA (December 5) and BOC (December 6) holding meetings for monetary policy decisions. We expect both central banks to keep their policies unchanged this month. The US nonfarm payrolls for November would due Friday. Meanwhile, UK PM Theresa May has headed to Brussels to meet Jean-Claude Juncker, President of the European Commission, on Monday. It is expected that May would present UK's offer of the divorce bill and the proposal on dealing with the Irish border. The EU ambassadors would resume preparations on December 6 for the upcoming Brexit summit.

Commitments of Traders

With the exception of crude oil, speculators were bearish over the energy complex in the week ended November 28. Net LENGTH for crude oil futures soared +32 755 contracts from a week ago to 609 833. NET LENGTH of heating oil decreased -39 contracts to 62 683 while net LENGTH for gasoline fell -1 671 contracts to 83 162. Net SHORT for natural gas jumped +21 279 contracts to 98 402 for the week.

With the exception of silver, speculators were bullish over the precious metal complex last week. Net LENGTH for gold surged +22 590 contracts to 224 417, while that for silver futures dropped -8 859 contracts to 57 782. For PGMs, net LENGTH for platinum gained +5 525 contracts to 32 046 while that for palladium rose +2 012 contracts to 25 431.


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