The United States of America dollar steadied on Thursday, November 30, but was set for its biggest monthly drop since July as investors grew cautious about the outlook of the world’s biggest economy.
The dollar index, which gauges the greenback against a basket of six major rivals, was steady on the day at 93.219 .DXY but was down 1.4 percent for November, its biggest drop in four months.
Though third quarter economic growth in the U.S. was revised up to 3.3 percent on an annualized basis, market participants grew wary about the outlook for U.S. interest rates after next month’s much anticipated rate hike.
“The upside for the dollar looks limited for now and euro/dollar is set to rise as the growth story in Europe gathers momentum,” said Morten Helt, a senior FX strategist at Danske Bank who expects the euro to strengthen to $1.25 against the dollar over the next 12 months.
The staggered progress of U.S. tax reform legislation also overshadowed the impact of upbeat economic data on the dollar to some extent.
Congressional Republicans scrambled on Wednesday to reformulate their tax bill to satisfy lawmakers worried about how much it would expand the federal deficit, as the measure moved toward a U.S. Senate floor vote later this week.
“Aside from the good economic data, I think most investors are focused on the tax bill,” said Jeff Kravetz, regional investment strategist at U.S. Bank Wealth Management.
“If it does pass, that should give a lift to the dollar, because tax reform is what investors have been focused on for most of the year.”
Meanwhile, the Sterling GBP=D3 was up 0.4 percent at $1.3455 in early trades and was just below a fresh two-month high of $1.3480 hit in the Asian trading session.
