Dollar rises on hopes for Trump tax reform

Fri Feb 10, 2017 4:03pm EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Sam Forgione

NEW YORK (Reuters) - The U.S. dollar hovered near its highest level against a basket of major rivals in 11 days on Friday after comments from U.S. President Donald Trump did little to shake optimism that his administration would reform tax policy soon.

At a joint news conference with Japanese Prime Minister Shinzo Abe, Trump avoided repeating harsh campaign rhetoric that accused Japan of taking advantage of U.S. security aid and stealing American jobs.

Trump did not reiterate his recent accusation that Japan was one of several countries devaluing their currencies to the disadvantage of the United States, but said in reference to currency devaluations that countries would be at a level playing field soon.

Despite briefly turning negative during the news conference, the dollar index was last up about 0.2 percent at 100.800 .DXY, roughly unchanged from where it was before the conference and near an 11-day high of 101.010 struck in morning U.S. trading. The index measures the greenback against a basket of six major currencies.

Analysts said Trump's promise on Thursday of a "phenomenal" tax reform plan over the next two or three weeks continued to support the dollar against most of its major rivals.

"The underlying bigger story in the last 24 hours is that Trump has put the reflation trade back on the front foot by talking about a tremendous tax program," said Richard Franulovich, a senior currency strategist at Westpac Banking Corp in New York.

The dollar briefly fell to a session low of 112.87 yen during the Trump-Abe news conference. The dollar index was still set to post its best weekly percentage gain since mid-December, of 0.9 percent.

Analysts said an announcement that Federal Reserve Governor Daniel Tarullo would resign from the U.S. central bank opened the door for Trump to choose a more hawkish replacement, and may have been positive for the dollar on the margin.   Continued...

 
U.S. dollar notes are seen in this November 7, 2016 picture illustration. REUTERS/Dado Ruvic/Illustration