US Dollar turns flat near 94.70 as markets await Fed chair announcement

• Weekly initial jobless claims dropped to lowest level since 1973.
• Latest version of the tax bill raises concerns over the potential increase in federal debt.
• Fed's Powell is expected to be appointed as Yellen's successor.

Following moderate fluctuations in the early NA session, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, is moving sideways a little below the 94.70 handle as investors are waiting on President Trump's announcement of the next Fed chair. "The nomination of Jerome Powell as Fed Chair is unlikely to cause any major fallout in the USD today – with ING estimates at best saying that the dollar could fall by 0.50-0.75% over the next few weeks as some of the more hawkish Fed policy bets get priced out of markets," argues Viraj Patel, Foreign Exchange Strategist at ING.

• Awaiting US president Trump's pick of the new Fed Reserve Chief - UOB

Tax reform to hit a bump in Senate?

Although the greenback gathered strength against its peers after the upbeat data from the United States, it failed to build on its gains as the House GOP tax plan weighed on the US T-bond yields. According to the US Department of Labor, the initial jobless claims eased to its lowest level since 1973 at 229K in the week ending October 28, ramping up the expectations for a robust NFP reading tomorrow. Moreover, nonfarm productivity expanded by 3% in the third quarter and surpassed the market estimate of 2.4%.

• US: Weekly initial claims was 229,000, a decrease of 5,000 from previous week

In their most recent version of the tax bill, House Republicans aim to reduce the corporate tax rate to 20% from 35% as expected. However, amid changes to other areas of the bill such as income and property tax rates, the federal debt is seen rising by $1.5 trillion over the next decade, which would require Democrats' support for the bill to become legalized.

• U.S. House tax chief: Tax bill will be revised to bring deficit to within $1.5 tln ceiling

Technical levels to consider

The first critical resistance for the index could be seen at 95.00/95.05 (psychological level/daily high). A decisive rise above that level could allow for further gains toward 95.60 (Jul. 14 high) and 96.25 (Jul. 5 high). On the downside, supports align at 93.80 (100-DMA), 93.35 (Oct. 26 low) and 92.95 (50-DMA).