Dollar dips on Mnuchin tax comments, Fed expectations

Thu Feb 23, 2017 3:46pm EST
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By Sam Forgione

NEW YORK (Reuters) - The U.S. dollar fell against a basket of major currencies on Thursday on a perceived lack of progress on U.S. tax reform, while Wednesday's more dovish-than-expected Federal Reserve meeting minutes continued to weigh on the greenback.

The dollar fell as much as 0.6 percent against the yen to a two-week low of 112.55 yen JPY=, while the euro rose as much as 0.4 percent against the dollar to $1.0595 EUR=.

Concerns over politics on both sides of the Atlantic helped the safe-haven yen, with anti-EU French presidential candidate Marine Le Pen's campaign and U.S. President Donald Trump's policy timeline stoking demand for the Japanese currency.

New U.S. Treasury Secretary Steven Mnuchin told Fox Business Network that any policy steps the Trump administration takes would likely have a limited impact this year and told CNBC that he wanted to see tax reform passed before Congress' August recess.

That was in line with comments by other politicians over the past month, but seemed to some investors to dial back Trump's own recent promises.

"Most people were hoping that these policy changes would be enacted fairly quickly," said Jason Leinwand, founder and chief executive of FirstLine FX in Randolph, New Jersey. "The market is starting to realize it’s not going to happen as soon as expected."

Concerns over the strength of far right leader Marine Le Pen in the French presidential election campaign pushed the euro lower against currencies other than the dollar, including the yen, said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.

A poll showed Le Pen was only 10 points behind conservative Francois Fillon but 22 points behind centrist Emmanuel Macron in the potential second-round run-offs..   Continued...

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