Dollar Broadly Higher on Tax Reform Hopes

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For the fourth straight day, the US Dollar edged broadly higher largely on the backs of a hike in yields on US Treasury instruments. That encouraged FX traders to trim short bets; however, markets remain wary of pushing the Dollar up toward recent trading range peaks. The US Dollar Index, a gauge used by FX traders to assess the Dollar’s relative weight, hit a 1-month peak and could post a record-setting week for the year. That would depend on whether the Trump administration can make any headway on the often-promised tax reform agenda. A proposal put out yesterday, if approved by Congress, would be the largest tax overhaul in 30 years; critics have pointed out that corporations and wealth would receive preferential treatment.

As reported at 11:00 am (BST) in London, the GBP/USD was trading lower at $1.3375, down 0.15% about half way between the session trough of $1.3342 and the peak of $1.3409. The USD/JPY had just edged higher and was trading at 112.81 Yen, a gain of 0.01%; the pair earlier hit a peak of 113.210 Yen.

Upbeat Surveys Lift Euro

In the Eurozone, the EUR/USD edged higher after the release of economic data which showed that economic sentiment had improved in September. The European Commission released several surveys which largely had unexpectedly upbeat readings. With the exception of the consumer confidence survey which edged lower to -1.2 (as expected), the industrial confidence, business climate, economic sentiment and services sector sentiment all beat analysts’ forecasts. That helped the EUR/USD to move higher and the pair is currently trading at $1.1767, a gain of 0.20%; the pair is easing back from the earlier peak of $1.17747.

Barbara Zigah is a freelance journalist living in Ghana, who specializes in Forex-related content; her online work has appeared in the IB Times, NASDAQ, Benzinga, and Seeking Alpha.