Asian equities were mostly higher on Monday after Wall Street closed on record highs last Friday the U.S. Congress seemed very close to passing a final bill that will reduce corporate taxes from 35% to 21%.

The House and Senate are expected to vote on the bill by mid-week, before it goes to the White House for President Trump’s signature. Trump tweeted “I promised we would pass a massive TAX CUT for the everyday working American families who are the backbone and the heartbeat of our country, now, we are just days away.” If the bill is signed, it will be the first major legislative victory since he took office.

After details were released on Friday, U.S. companies labeled “Made in USA” will be the biggest beneficiaries of the new tax cuts – mainly oil refiners, airlines, and banks. Many corporates in this sector will see earnings boosted significantly, with some adding 30% to in 2018. This is not only good news for these corporates but it also makes current overstretched valuations look more realistic. What will be interesting to see is whether asset managers will rotate heavily from multinational firms to more U.S.-based revenue companies, for the few remaining days of 2017.

The impact on the overall economy remains unknown. Many CEO’s may choose to reward shareholders by increasing dividends and share repurchases, instead of expanding their businesses. That’s probably why the dollar isn’t responding very positively to the news.

Another explanation for the limited appreciation in the USD is the Treasury bond performance. US 10-year yields have been stuck in a range of 2.3%-2.43% for two months, and if optimism isn’t reflected in the fixed income space, I don’t expect to see much appreciation in the currency, even after Mr. Trump signs the bill.

Sterling will remain in focus this week after the EU warned that the UK would be unable to renegotiate a new Brexit deal, if the Parliament votes to reject the one struck by Theresa May.  May will meet her Brexit Cabinet today in an attempt to convince MP’s to sign trade deals during the transition period. A positive outcome will likely lead to a relief rally in the pound, but given the loss in the Commons last week a soft Brexit seems to be at high risk.

Euro traders will keep a close eye on inflation data today. Consumer prices are expected to have risen by 0.1% in November. Given that the ECB has updated growth projections and latest PMI data pointed towards a stronger economy, inflation remains the missing ingredient. Any surprise, on the upside or downside, will likely have a strong impact on EURUSD moves today.