Dollar steadies as tax overhaul gets US House nod

Key Points
  • U.S. House of Representatives approves tax overhaul.

  • SNB head says not ready to normalize monetary policy.

Dan Kitwood | Getty Images

The U.S. dollar edged higher against a basket of major currencies on Thursday, rebounding from a more than three-week low in the previous session, after the U.S. House of Representatives passed their version of the tax overhaul bill.

The dollar index, which measures the greenback against six rival currencies, was up 0.12 percent to 93.92.

The U.S. House of Representatives approved a broad package of tax cuts affecting businesses, individuals and families on Thursday, moving Republicans and President Donald Trump an important step closer to the biggest tax code overhaul in a generation.

"The tax plan isn't a foregone conclusion but it passed the lowest hurdle in the House," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.

"The even higher hurdle is to have something pass in the Senate. The reconciliation will be the real measure if it happens," he said.

Senate tax provision follows 'first in, first out' accounting

The dollar index, which hit 93.813 on Wednesday, its lowest since Oct. 20, was also boosted by a general improvement in risk appetite across financial markets.

"Some of the selling pressure on the dollar seems to have abated a little bit. We are seeing a slightly less negative mood in global financial markets," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

Investors tentatively returned to stock markets around the world looking for bargains on Thursday.

"We are also seeing some of the steam come out of the euro's rally," Esiner said.

The common currency had soared this week after data showed the German economy shifted into a higher gear in the third quarter, but gave up some gains after Wednesday's upbeat data on underlying inflation in the United States.

"All things being equal, the news that we saw this week does little to change the broader outlook for the U.S. Federal Reserve to far outpace the European Central Bank in policy normalization for the foreseeable future," Esiner said.

"The outlook for the Fed should continue to keep the dollar's pullbacks relatively short-lived."

The euro was 0.21 percent lower at $1.1766.

The Canadian dollar strengthened against its U.S. counterpart as data showing a surprise rise in domestic manufacturing sales in September offset lower oil prices.

The greenback rose 0.55 percent against the Swiss franc after the Swiss National Bank signaled that it remained committed to its ultra-loose monetary policy.