Dollar Holds Steady as U.S. Tax Reform Plans Dominate

Dollar Holds Steady as U.S. Tax Reform Plans Dominate
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(November 10, 2017) The dollar held steady near one-week lows against other major currencies on Friday, as concerns over the fate of a highly-anticipated U.S. tax reform bill continued to dampen demand for the greenback.

U.S. Senate Republicans unveiled a plan on Thursday which would reduce the corporate tax rate to 20% from 35% and make other significant changes to the individual tax system.

However, investors remain cautious as Senate Republican leaders said that they were considering postponing the implementation of the major corporate tax cut until 2019.

Meanwhile, a House tax reform bill, which differs from the Senate version, would be expected to take effect next year. If the Senate and House pass separate tax bills, lawmakers will have to reconcile them.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 94.44 by 07:50 a.m. ET (11:50 GMT), just off a one-week low of 94.31 hit overnight.

EUR/USD held steady at 1.1648, while GBP/USD rose 0.21% to trade at 1.3173 after the UK Office for National Statistics said manufacturing and industrial production both increased by 0.7% in September and both beating expectations for a 0.3% uptick.

Year-on-year, manufacturing production increased more than expected by 2.7% in September, while industrial production advanced by 2.5%.

Elsewhere, USD/JPY was almost unchanged at 113.39, while USD/CHF added 0.14% to 0.9942.

The Australian dollar turned lower, with AUD/USD down 0.18% at 0.7666, while NZD/USD held steady at 0.6942.

Earlier Friday, in its quarterly monetary policy statement, the Reserve Bank of Australia downwardly revised growth expectations for December 2017 to 2.5% from 2-3% in the previous forecast issued in August.

However, the RBA said it expects the economy to expand at “a solid pace” over the next few years, citing positive labor market developments.

Meanwhile, USD/CAD eased 0.09% to trade at 1.2671, the lowest since October 25.

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