The dollar only held its gains against the Japanese yen on Thursday after US President Donald Trump’s tax plan offered no surprises, slowing the greenback’s rally.
The market also awaited the European Central Bank’s monetary policy decision.
The Canadian dollar and Mexican peso, which had slumped earlier on reports the United States is considering withdrawing from the North American Free Trade Agreement (NAFTA), bounced sharply after Trump said he would not scrap the pact but renegotiate instead.
The US dollar had surged to a four-week high of 111.780 yen on Wednesday before Trump’s tax reform plans were unveiled. But it lost traction as the proposals failed to excite investors. The dollar was last up 0.2 per cent at 111.20 yen .
The dollar index against a basket of major currencies slipped 0.2 per cent to 98.841 after rising as far as 99.332 the previous day.
Trump’s plan would cut the income tax rate paid by public corporations to 15 per cent from 35 per cent and reduce the top tax rate assessed on pass-through businesses, including small partnerships and sole proprietorships, to 15 per cent from 39.6 per cent.
“It (the plan) was kind of as we expected really. The dollar generally has come off on the view that the announcement of the so-called plan reads more like a wish list than a firm plan,” said Adam Cole, currency strategist with RBC Capital Markets in London.
The euro was up 0.1 per cent at $1.0913. It has had a buoyant week, climbing to a 5-1/2 month high of $1.0951 on Wednesday, as the first round of the French presidential elections held over the weekend reduced perceived risk towards the common currency.
The European Central Bank is due to announce its policy decision later on Thursday. It is not expected to move, waiting until its June meeting to signal any plans to pull back from its ultra-loose monetary policy.
The Swedish crown fell more than half a percent to 9.060 per euro after the Riskbank kept its benchmark interest rate at -0,5 per cent, as expected, and said it would extend its bond-buying programme by 15 billion Swedish crowns.
The Canadian dollar bounced 0.6 per cent to C$1.3542 per dollar, while Mexico’s peso strengthened 1.2 per cent to 18.95 pesos per dollar as Trump’s latest stance on NAFTA eased concerns towards US trade protectionism for now.
[source:-hindubusinessline]
