President Donald Trump, still seeking his first big legislative achievement, last week introduced a reform plan intended to simplify the cumbersome US tax code. Markets greeted the proposal positively, powering US equities and the dollar higher in anticipation of stronger economic growth. Global volatility remained broadly under control despite mixed election results in Germany and the dissolution of the lower chamber of Japan’s parliament. German Chancellor Angela Merkel will be under pressure to stitch together a three-party coalition after her Christian Democratic Union secured less seats than expected in last Sunday’s German election. The uncertain political climate sent the Euro lower against most of its major peers.
Brent futures rose for the fifth straight week on mounting Middle-East tensions after Turkey threatened to block Iraq’s exports following an independence referendum by Iraqi Kurds. On the economic data front, estimates from the US Bureau of Economic Analysis showed the economy expanded at an annualized rate of 3.10%, upwardly revised from last month’s reading of 3.00%. US durable goods orders for August came in better than projected, while new home sales fell short of estimates. Elsewhere, inflation in the Euro Area failed to pick up in September, with consumer price growth staying unchanged from August at 1.50%. In monetary policy action, the Reserve Bank of New Zealand left the official cash rate at a record low of 1.75%.