Kiwi Gains After Better Than Expected Q3 GDP, US Tax Bill Passes
The Kiwi gained in early Asia on Thursday as GDP for the third quarter came in higher than expected and the dollar rose against the yen ahead of a central bank meeting and the passage of US tax cuts Tuesday.
The Republican-controlled U.S. House of Representatives gave final approval to a sweeping tax bill, which will be the largest overhaul of the U.S. tax code in 30 years. The Senate had already voted in favor of the bill and President Trump marked its passage with remarks at a White House ceremony. The proposed changes include cutting the corporate tax rate to 21% from 35% from Jan. 1, which could boost company earnings and pave the way for higher dividends and stock buybacks.
The Bank of Japan unveils its latest policy views with expectations of steady policy, though investors are looking for tweaks to language on the economic outlook.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted down 0.13% to 92.93.
Overnight, the dollar continued to trend lower against a basket of major currencies on Wednesday as bullish housing data failed to lift sentiment.
The National Association of Realtors said on Wednesday that existing home sales in November sales rose 5.6% to a seasonally adjusted annual rate of 5.81 million units. That beat economists’ forecasts for a 0.9% decline to 554,000 homes.
That upbeat home sales data raised investor expectation for an increase in consumer spending growth as home buyers are expected to furnish their new homes with new appliances and furniture.
The dollar has struggled to advance on tax-reform optimism as some market participants suggested the potential benefits of tax reform have largely been priced in, while others questioned the extent to which lower taxes would lift the economy.
Also weighing on the dollar was euro strength as the single currency continued added to gains against the greenback amid ongoing investor optimism in German Chancellor Angela Merkel’s ability to form a coalition government with the Social Democrats