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Dollar slips as US Senate tax bill details emerge

Dollar slips as US Senate tax bill details emergeNEW YORK: The US dollar slipped to a six-day low against a basket of currencies on Thursday as investors balked at emerging details of the US Senate Republicans’ version of a tax cut plan.

Rival Republican tax-cut plans were emerging in the US Congress on Thursday that differed on issues such as cutting the corporate income tax, the deduction for state and local taxes and the tax on inheritances paid by the richest Americans.

US Senate Republicans’ version of a tax cut bill will delay corporate rate cuts by one year to take effect in 2019, and will not include a repeal of Obamacare’s individual mandate, Republican Senate Finance Committee member Bill Cassidy said ahead of the plan’s release later on Thursday.

The dollar index, which tracks the greenback against six major currencies, was down 0.4 percent to 94.482.

“I think the markets are getting a bit jittery over details of the plan as it looks like it is going to be pushed off another year,” said Paresh Upadhyaya, director of currency strategy at Amundi Pioneer Investment Management in Boston.

“The initial reaction is disappointment over the Senate plan.”

Any potential delay in the implementation of tax cuts, or the possibility of proposed reforms being watered down, would tend to work against the dollar, analysts said.

Against the yen, the dollar slipped to its lowest this month, and was down 0.58 percent to 113.2 yen.

“There is a bit of a risk-off undertone to markets here,” said Shaun Osborne, currency strategist at Scotia Bank in Toronto, referring to the yen’s performance against the greenback.

Analysts also pointed to a sudden fall in Japanese equities from multi-decade peaks on dampening risk sentiment in Asian trade, a mood that continued into London trading hours with European stocks also falling, as hurting investor sentiment.

Euro zone government bond yields jumped on Thursday, kicking recent sharp falls into reverse, and the euro climbed to a six-day high. The common currency was up 0.43 percent against the greenback.

Britain’s sterling was up 0.28 percent against the greenback, after erasing earlier losses. British Prime Minister Theresa May will restate her desire for a two-year Brexit implementation period when she meets European business organizations on Monday, her office said in a statement.

The Swiss Franc hit a two-week high against the dollar after Swiss National Bank Chairman Thomas Jordan said the franc was currently “highly valued” but avoided reiterating his until summer oft-repeated statement that the franc was “significantly overvalued.”

Copyright Reuters, 2017

Source: Brecorder.com

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