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Dollar Inches Forward as Congress Prepares for Tax Vote

12/20/2017, 11:41:36 AMMarket Analysis
Dollar Inches Forward as Congress Prepares for Tax Vote

The dollar gained some ground against other majors currencies on Tuesday, as both the House and Senate prepare to vote on the U.S. tax reform bill later in the day.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rallied 0.03% to 93.26 by 11:21 a.m. ET (16:21 GMT).

The House of Representatives expected to vote on the bill at around 1:30 p.m. ET (18:30 GMT) on Tuesday and the Sante ate vote is expected to follow later in the day. The tax bill would cut corporate taxes to 21% from 35%, which some say would encourage companies to spend more, boosting the economy.

The dollar was sluggish in early morning trading, shrugging off data on Tuesday showing that the number of U.S. housing starts unexpectedly increased in November, while building permits declined much less than expected.

The greenback held against the yen, with USD/JPY rising 0.36% to 112.95.

Meanwhile the euro rose against the dollar, with EUR/USD increasing 0.28% to 1.1815 while GBP/USD slumped 0.31% to 1.3342.

Earlier Tuesday, data showed that German business confidence fell unexpectedly in December.

Elsewhere, the Australian and New Zealand dollars fell, with AUD/USD down 0.12% at 0.7653 and with NZD/USD falling 0.10% to trade at 0.6988.

Earlier Tuesday, data showed that the ANZ business confidence index for New Zealand improved to -37.8 in December from -39.3 the previous month.

Separately, the minutes of the Reserve Bank of Australia showed that the central bank is more confident the economy will strengthen further next year, potentially paving the way toward its first policy tightening since 2010