A vote against it might look like Trump's agenda is in distress
Credit Agricole CIB Research notes that the USD has been sold aggressively across the board after the dovish March hike by the Fed and, more recently, ahead of the vote in the US Congress on the Affordable Care Act (ACA or Obamacare) repeal bill Thursday.
In that regard, CACIB argues that the outcome of the vote in the House could have a long-lasting impact on USD given that a big chunk of the reflation trade hinges upon on the successful implementation of the tax cuts and (potentially) the introduction of borders tax adjustment).
"Our central case is that there will be enough support in the House for the bill to pass. We subsequently view the recent USD underperformance as temporary and expect it to go into reverse before long," CACIB projects.
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A separate note from Steven Ricchiuto, the chief US economist at Mizuho touches on the crux of the issue.
"The complexity of the problems clearly suggests [tax cuts] will not come before 2018 at the earliest, and neither will any of the planned increases in spending," he wrote.
Goldman hits it on the head.
"If you look at the chronology of this, right after the election there was a discussion about this was going to be a 2017 tax cut," writes economist Alec Phillips . "Now it's clearly a 2018 tax cut. Who knows? It could be a 2018-2019 story ultimately."
