Sun, Oct 22, 2017 - Page 14 News List

US dollar moves up versus safe havens on US budget plan

Reuters, NEW YORK

The US dollar made its biggest daily gain in a month on Friday and posted a weekly increase for the fifth time in six weeks as progress on US tax reforms raised prospects of a fiscal lift to the economy, bolstering investor appetite for risk.

The US dollar on Friday hit a three-month high against the Japanese yen to ¥113.52, up 1.5 percent from last week’s ¥111.84.

It also hit a five-month high against the Swiss franc, touching SF0.985, up 1 percent from last week’s SF0.975.

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, gained 0.6 percent to 93.701, up 0.7 percent from last week’s 93.091.

Traders seek the yen and Swiss franc in times of uncertainty and fear, and sell the currencies when they favor riskier assets.

“This is clearly a picture of somewhat of a risk-on rotation today, and it’s ignited some of the animal spirits as we take another step closer to the potential for tax reform coming to fruition,” said Bill Northey, chief investment officer at the Private Client Group at US Bank in Helena, Montana.

Senate approval of a budget blueprint on Thursday for the 2018 fiscal year cleared a critical hurdle for Republicans to pursue a tax-cut package without Democratic support.

In Taipei, the New Taiwan dollar on Friday fell against the US dollar, shedding NT$0.011 to close at NT$30.241. The NT dollar fell 0.2 percent against the US dollar from last week’s NT$30.185.

Investors also have viewed as bullish for the US dollar remarks this week from US Federal Reserve Chair Janet Yellen and other Fed officials that suggest the US central bank is moving forward with another rate hike this year.

The US dollar briefly fell on news that US President Donald Trump was considering nominating John Taylor and Jerome Powell to the top two posts at the Fed, one as chair and one as vice chair, and on news Yellen had lunched at the White House with Trump adviser Gary Cohn.

It quickly retraced those losses.

The US dollar’s strength dragged the euro down 0.6 percent to US$1.1763 ahead of a European Central Bank meeting next week in which policymakers are seen cutting bond purchases but voting for an extension in stimulus. The common currency slipped 0.5 percent from last week’s US$1.182.

The New Zealand dollar on Friday sank to a five-month low on concerns the new Labour coalition will take a harder stance on immigration and foreign investment than the outgoing center-right government.

Bitcoin soared to another milestone on Friday, as the digital currency breached US$6,000 for the first time to put its gain this year to more than 500 percent.

Additional reporting by CNA and Bloomberg

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