Dollar falls as US Senate tax bill is revealed
Thursday 9th November was not a good day for the US dollar, which slipped to a six-day low against an impressive basket of currencies, a trend catalysed by the emergence of details surrounding the US Senate Republicans’ proposed tax cut plan.
A number of rival proposals emerged, with widely differing approaches taken to issues such as corporate income tax, deductions for state and local taxes, and the inheritance sums levied against the country’s richest citizens.
Live Euro/US Dollar Rates:
Corporate Cuts Delayed
This tax cut bill will have the effect of delaying corporate rate cuts by around a year, so that they will now not take place until 2019, and will no longer repeal Obamacare’s individual mandate.
The result of such announcements was immediate, with the dollar index dropping 0.4 percent to 94.482.
As expert Paresh Upadhyaya commented: “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. The initial reaction is disappointment over the Senate plan.”
This is because potential delays in the introduction of tax cuts, and the increased possibility of watered-down reform, will likely disadvantage the dollar.
Broad List Of Currencies Gain
Little wonder, then, that the currency slipped to its lowest level this month against the yen, down by 0.58 percent to 113.2 yen.
Expert Shaun Osborne explains: “There is a bit of a risk-off undertone to markets here.”
This was to the advantage of the pound sterling, which rose 0.28 percent against the dollar, thus negating earlier losses. This may be partially attributable to an announcement by Theresa May, with the British Prime Minister having reiterated her wish for a two-year long Brexit implementation period.
The Swiss franc also saw an improvement in fortunes, rising to a fortnightly high against the American currency, despite Swiss National Bank Chairman Thomas Jordan having repeatedly stated that it is “significantly overvalued”.
Future For USD…?
With the economic future of America looking increasingly uncertain, this trend may well be one which endures for the foreseeable future, although as is ever the case with the Forex market, there is no such thing as a sure-fire prediction.
How will this information affect your trades?