The dollar jumped on Monday while Treasury yields rose and Wall Street was primed for a another record-setting day after the U.S. Senate voted to approve a wide-ranging tax overhaul. As Sonia Legg reports, the British pound also rose on expectations the United Kingdom would soon reach a deal on some of the terms of its planned exit from the European Union.
European markets had their own issues to monitor but it was the US tax law changes having the biggest impact. German, French and British markets were all up with Wall Street primed for another record-setting day. The dollar and US treasury yields also rose. (SOUNDBITE) (English) PETER DIXON, GLOBAL ECONOMIST, COMMERZBANK, SAYING: "If we can finally get a deal which goes to the President's desk it would be the first major piece of legislation during his time in office and of course that in itself is a significant achievement. And also the very fact that this is the first time we've actually overhauled the U.S. tax code in a generation really." Tax cut hopes have been a significant tailwind for U.S. stocks this year. Even though the move is expected to add to the country's $20 trillion national debt and increase the chances of more near-term rate rises (SOUNDBITE) (English) PETER DIXON, GLOBAL ECONOMIST, COMMERZBANK, SAYING: "I guess it is a reflection of the fact that markets at the moment aren't looking that far ahead. They're looking at the short term gains and I guess they are going to worry about the longer term losses sometime in the future." Asia markets had a shaky start despite the weekend developments thanks to an early sell off of technology shares. But the focus quickly switched to Britain with Prime Minister Theresa May in Brussels for crunch Brexit talks with EU officials. Hopes of a deal were boosted by comments from a member of the Brexit group. Elmar Brok said he was "astonished" but how far negotiations had come, pushing sterling to up 0.8 percent on the day to a one-month high against the euro. Britain's FTSE 100 which tends to fall when sterling rises pared earlier gains.