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Dollar dips ahead of US tax bill unveiling

Dollar dips ahead of US tax bill unveiling

Thu Nov 02 2017

 

The dollar pulled back from a three and a half month high versus the yen, sagging ahead of a US tax bill that will be unveiled after a one-day delay.

 

The dollar slipped 0.15 per cent to 114.030 yen.

 

It had gained about 0.5 per cent overnight and approached 114.450, its highest level since July 11 set on Friday, underpinned by upbeat US data and enhanced prospects for a December interest rate hike by the Federal Reserve following its two-day policy meeting on Thursday.

 

The Fed left interest rates unchanged as widely expected, but further sharpened expectations for year-end rate hike by highlighting “solid” economic growth and a strengthening labour market.

 

Thursday’s robust US ADP private employment report was the latest in a list of strong indicators that have backed the Fed's quest to normalise monetary policy.

 

The dollar’s advance, however, was curtailed as other factors pertaining to US fiscal and monetary policy came into focus.

 

“The dollar was buoyed by the Fed’s statement but the impact was limited as the decision and its statements produced little surprises,” said Shin Kadota, senior strategist at Barclays in Tokyo. “The likelihood of (Fed Governor Jerome) Powell being nominated as the next Fed chair is capping the dollar. The delay in the tax bill announcement is also a potential sign of internal squabbles.”

 

After an embarrassing one-day postponement of the bill’s unveiling on Wednesday, US lawmakers have made plans for a measure that will seek up to $6 trillion in tax cuts over 10 years but likely not spell out completely how to offset them.

 

The dollar has drawn support since September on tax hopes and some of the “tax reform trades” that lifted the currency could be unwound if the bill reveals discord among lawmakers, Kadota at Barclays said.

 

US President Donald Trump plans to nominate current Fed Governor Jerome Powell, seen as less hawkish compared to other candidates, as the next chair of the Federal Reserve, a source familiar with the matter said on Wednesday. The announcement is expected on Thursday.

 

The euro was 0.1 per cent higher at $1.1631.

 

Sterling nudged up 0.1 per cent to $1.3265 ahead of a Bank of England policy decision due at 1230 GMT.

 

The BoE is widely expected to raise interest rates for the first time since July 2007 and investors will be focused on the degree of unity among policy makers as they gauge the likelihood of further increases.

 

Against the euro, the pound was at 87.75 pence after advancing to 87.33 pence overnight, its strongest since mid-June.

 

The dollar index against a basket of six major currencies slipped 0.15 per cent to 94.685 after gaining 0.3 per cent the previous day.

 

The New Zealand dollar extended the previous day’s rally, when it soared after data showed the nation's jobless rate fell to a nine-year low.

 

The kiwi was up 0.3 per cent at $0.6903. It had fallen to $0.6818 on Friday, its lowest since May, having come under pressure on fears of the New Zealand’s new Labour-led coalition government’s left-leaning policies.

 

Source: http://www.thehindubusinessline.com/

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Tuesday, November 14, 2017
ExchangeCommodityContractOpenHighLowClose
MCXAluminiumNov17137.25137.8135.75135.95
MCXAluminium MiniNov17137.4137.8135.75136
NCDEXBarleyNov171502150215021502
MCXCardamomNov17830830830830
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