With the economic calendar particularly light during the week just ended, investors were left to focus on efforts in the US Congress to pass tax reform measures. Market sentiment turned cautious as the week progressed, with many of the new revenue sources recommended by House leaders to compensate for steep corporate tax cuts proving to be contentious. Investor concerns mounted on Thursday after Senate Republicans unveiled a draft plan of their own, which proposed delaying the rate cut until 2019. The Grand Old Party’s leaders are under acute pressure to pass the tax bill before the year ends after failing to enact any major law during President Donald Trump’s first year in office.
In Europe, volatility remained elevated as leading European Central Bank policymaker Benoit Coeure warned that financial markets in the region were not deep enough to allow quantitative easing to run on indefinitely. On the currency front, the Kiwi Dollar failed to add to gains after the Reserve Bank of New Zealand brought forward its forecast for the next interest rate hike to the second quarter of 2019. Crude prices returned to levels not seen in more than two years, buoyed by the ongoing purge in Saudi Arabia and heightened tension between Riyadh and Teheran. Oil was also underpinned by the potential risk of a Venezuelan debt default, with a crucial restructuring talk scheduled for Monday.