The United States of America dollar depreciated on Tuesday, December 19, for a second consecutive day on Tuesday as investors took the view that a major U.S. tax overhaul would be unlikely to boost the economy significantly, with most major currencies trading in tight ranges in a relatively thin market.
The dollar, measured against a broad trade-weighted basket of major currencies, was down 0.14 percent .DXY.
The euro EUR=EBS was up 0.2 percent at 1.1808 against the dollar, and broadly flat against the pound EURGBP=D3 at 88.16 pence per euro.
“It’s very difficult to call for a significant increase in value of [U.S.] yields when inflation is low. That is a constraint for the value of the dollar,” she said.
Traders are shying away from taking big positions ahead of the holiday season, although news that the U.S. tax reform was set to become law helped support some risk appetite.
The euro is up more than 12 percent against the dollar so far this year and is on track for posting its best annual performance since 2004.
Euro zone economies have posted better-than-expected economic data and political stability this year has been stronger than many had predicted at the start of the year.
In the United States, the Republican-controlled Congress appears all but certain this week to pass the sweeping tax overhaul backed by President Donald Trump after two Senate Republican holdouts agreed on Monday to support it.
Rising hopes of the bill’s passage helped push U.S. stocks to record highs on Monday. European stock futures had a timid start after corporate deal-making had pushed markets higher earlier in the week.
While Fed policymakers expect the U.S. economy to get a short-term lift from the tax reform, they project growth will then ease back to about 2 percent by 2020 and not rise to around 3 percent as Trump and his administration predict.
“The tax reform is going to be one of the key angles for markets this week…(but) nobody is going to be taking any major positions before the year-end,” said Viraj Patel, a foreign exchange strategist at ING.
Dollar index trims fall as U.S. housing starts post gain The dollar was broadly flat against the yen at 112.62 yen JPY=EBS, drifting in a range between a high of 113.750 hit a week ago and Friday’s low of 112.035.
Bitcoin fell 5.52 percent at $17,895 BTC=BTSP on the Luxembourg-based Bitstamp exchange, below its record high of $19,666 hit on Sunday.
