The dollar fell against a basket of major currencies on Monday, as concerns grew on whether a proposed U.S. tax reform program would have a major impact on economic growth, after the bill moved another step closer to passage over the weekend.
The U.S. currency had edged higher after Republicans on the House-Senate negotiating committee on Friday put the finishing touches to a sweeping tax overhaul that involves large cuts in levies on corporations. But it slid on Monday on some uncertainty that the bill would indeed be pushed through, and with some doubts creeping in over the pro-growth effect the tax reforms would have.
"Even a passage of the bill by the year's end could have a limited impact on the dollar as investors are increasingly skeptical of the sustained positive impact the rushed bill will have on the economy," said Omer Esiner, chief market analyst at Commonwealth FX in Washington.
Despite the dollar's latest dip, some analysts believe the dollar has further scope to go higher.
"Economic forecasters expect lower corporate taxes to raise U.S. growth by roughly 0.5 percent over the next year, potentially lifting the pace of interest rate increases from the two currently being priced in by the market to closer to the three hikes consistently estimated projected by Federal Reserve policymakers," said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Washington