Treasury chief Steven Mnuchin said this week that markets could see a correction if US lawmakers fail to pass the president’s tax-cut measures, while People’s Bank of China governor Zhou Xiaochuan warned of “excessive optimism” and a possible plunge in prices.
But Trump’s promise to pass the legislation moved a step closer late Thursday when senators agreed a budget resolution that unlocks a procedure allowing Republicans to push through such measures without the need for Democrat help.
Trump hailed the vote as “an important step in advancing the administration’s pro-growth and pro-jobs legislative agenda”.
Expectations the tycoon’s tax cuts and big spending plans would boost the economy were one of the drivers of a months-long global markets rally that kicked off after his November election, though a series of White House crises and legislative setbacks pared those gains.
While the controversial proposals still have a long way to go before being passed, the news spurred Asian markets to life after a plodding start to the day, while the dollar strengthened against the yen, euro and pound.
“The budget still has to also pass the House, but near term, it should be supportive for the dollar,” Shinichiro Kadota, a senior foreign-exchange strategist at Barclays Securities Japan in Tokyo, told Bloomberg News.
“Senate passage of budget was a step required for budget reconciliation to advance tax reform.”
And Stephen Innes, head of Asia-Pacific trading at OANDA, said: “It’s likely not too late to jump on this party bandwagon as global equity markets continue ratcheting higher… or the Trump trade bandwagon for that matter.”
Tokyo ended marginally higher as a weaker yen helped reverse early losses to see the Nikkei to its 14th straight gain, matching its best run since 1961.