Dollar Rises on Tax Reform Hopes; USD/CAD Spikes on Governor Poloz Remarks
The dollar rose against a basket of major currencies, after President Trump and Republican leaders on Wednesday revealed details of a plan for tax reform which helped offset earlier weakness following a mixed bag of economic reports.
Republicans in the U.S. Congress and the White House unveiled plans to change America’s tax code in a proposal that slashes taxes on businesses and the wealthy, lowering the corporate rate from 35% to 20%.
Investors, however, mulled over the lack of detail on how on the tax reform will be funded, fueling fears that key elements missing from the plan could invite pressure from support industry groups and lobbyists.
The framework for tax reform came just hours after a pair of mixed economic reports forced the greenback to retreat from a 1-month high.
The Commerce Department said on Wednesday non-defense capital goods ordersexcluding aircraft, a closely watched proxy for business spending plans, rose 0.9 % last month after an upwardly revised 1.1% increase in July.
The housing sector, meanwhile, continued to weaken as the National Association of Realtors’ pending home sales fell 2.6% to 106.3 in August. That was the lowest reading since January 2016.
The dollar's steady gain weighed on both the pound and euro, as both currencies gave up some of their recent gains against the greenback.
USD/JPY rose 0.39% to Y112.69 as easing geopolitical tensions on the Korean Peninsula reduced safe-haven demand.
USD/CAD gained 0.63% to $1.2429 after Bank of Canada governor Stephen Poloz insisted that there is no “predetermined path” for rate hikes, dampening expectations that the central bank would hike rates at least once more this year