NEW YORK: The dollar fell against a basket of other major currencies on Monday as traders braced for the resumption of deliberations on the US tax plan and the confirmation hearing for Federal Reserve Governor Jerome Powell as the central bank’s next chair.
The dollar index, which measures the greenback against six rival currencies, was down 0.06 percent at 92.724, after hitting a nine-week low of 92.496 earlier in the session.
Last week, the index fell nearly 1 percent, its third straight week of declines and worst weekly showing in more than two months.
“It seems that markets are not particularly positive on the dollar unless we see some progress on tax reform this week or higher inflation numbers,” said FX strategist Vassili Serebriakov of Credit Agricole in New York.
“I think the story from the past week or even couple of weeks now with the flattening US yield curve is still playing a role,” he added.
Concern about stubbornly low inflation has boosted longer-dated debt and sent the US Treasury yield curve to its flattest levels in a decade.
US President Donald Trump will meet with Senate Republicans on Tuesday to discuss their party’s efforts to pass tax legislation.
Worries about potential delays in the implementation of tax cuts and the possibility of proposals being weakened have weighed on the dollar in recent weeks.
“While progress is being made on tax reforms, traders may well be doubting how quickly they will be enacted and how significant the final draft will be for the economy and therefore interest rates,” Oanda markets analyst Craig Erlam said in a note.
The dollar was 0.35 percent lower against the yen.
Traders were also focusing on the upcoming change of guard at the Fed as Powell appears before the Senate Banking Committee on Tuesday. Outgoing Chair Janet Yellen appears before the Joint Economic Committee on Wednesday.
The US dollar gained 0.06 percent against its Canadian counterpart as oil prices pulled back from a two-year high.
Sterling was up 0.11 percent at $1.335 after hitting an eight-week high of $1.3382 as some investors covered their short positions against the British currency.
South Africa’s rand bounced against the dollar after the country avoided a double downgrade of its local-currency debt.
Source: Brecorder.com
