Thursday, 2 November 2017

Forex - Dollar Dips Before U.S. Tax Bill, Sterling Eyes Rate Decision-SapForex24

The dollar edged lower on Thursday as investors awaited the release of a U.S. tax bill after a one-day delay, while the pound pushed higher ahead of a Bank of England policy decision later in the day.

House Republicans were expected to release a tax bill later Thursday amid ongoing internal disagreements over how proposed tax cuts will be paid for.

Lawmakers have made plans for measures seeking up to $6 trillion in tax cuts over 10 years.
The dollar has been boosted in recent months by hopes that tax reforms could bolster growth, adding pressure on the Federal Reserve to raise interest rates, known as the "Trumpflation" trade.

The Fed left rates unchanged on Wednesday in a widely expected decision, but expectations for a December rate hike sharpened as officials noted “solid” economic growth and a tightening labor market.

Earlier Wednesday a strong ADP nonfarm payrolls report underlined the case for further monetary tightening.

Meanwhile, investors were awaiting an official White House announcement on President Donald Trump’s pick for the next Fed chairman. Recent reports have indicated that Trump is likely to appoint Fed Governor Jerome Powell, who is viewed as more dovish than other candidates.

The dollar was a touch lower against the yen, with USD/JPY last at 114.11, holding above an overnight low of 113.61.

The euro pushed higher, with EUR/USD rising 0.15% to 1.1635.

Sterling gained ground, with GBP/USD up 0.18% at 1.3269 ahead of a BoE meeting later in the day where the bank was widely expected to raise interest rates for the first time since 2007.

Investors will be focusing on the degree of consensus among policymakers as they try to gauge the likelihood of further rate hikes.

The pound was little changed against the euro, with EUR/GBP at 0.8770.

Meanwhile, the Australian and New Zealand dollars advanced, with AUD/USD adding 0.42% to 0.7709 and NZD/USD rising 0.38% to 0.6911.

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