Dollar hits two-week high on US tax reforms, stocks climb
london — The dollar rose to its highest level in two weeks on Thursday over optimism the United States would successfully push through tax reforms, while world shares rebounded after two straight days of losses.
The US currency slipped against the safe-haven Japanese yen on Wednesday after President Donald Trump said he would recognise occupied Jerusalem as the capital of Israel — a move that imperiled Middle East peace efforts and provoked widespread condemnation.
But amidst a broader climb in global stocks on Thursday, the greenback rose 0.3 per cent against the yen to trade at 112.60 yen, and hit a two-week high against a basket of peers.
The MSCI World Index, which tracks shares in 47 countries, was up 0.1 per cent.
Underpinning some of the dollar’s gains analysts said was some cautious optimism on progress over US tax reforms.
US Senate Republicans agreed to talks with the House of Representatives on sweeping tax legislation on Wednesday, amid early signs that lawmakers could bridge their differences and agree on a final bill ahead of a self-imposed December 22 deadline.
“The dollar is fighting back a little bit but there’s still some caution, as it could still be a few weeks until we know the outcome of the tax reform bill,” said Rabobank currency strategist Jane Foley, in London.
“The yen will be sensitive if geopolitical tensions rise again, and I think there’s an inevitability to that, so I don’t think there’s going to be too much updside for dollar/yen in this environment,” she added. Upbeat US private-sector employment We have seen some aggressive moves in Asia
David Madden, Analyst, CMC Markets
data released on Wednesday also provided some support to the dollar. But strategists said the currency would trade in narrow ranges until the release of the closely watched non-farm payrolls report on Friday.
Bitcoin soared to a record high of more than $14,500, up almost 7 per cent on the day and continuing a staggering surge from less than $1,000 at the beginning of the year. European stock markets appeared to take their cues from a general recovery in tech stocks overnight in Asia and Wall Street.
The pan-European STOXX 600 was up 0.2 per cent with tech stocks initially up 0.5 per cent. Financials, industrials and healthcare shares also added points to the index.
“We have seen some aggressive moves in Asia, whereas Europe seems to be a bit more subdued,” said David Madden, analyst at CMC Markets in London.
“It’s almost like European markets look for an excuse to selloff but it takes them a lot to be convinced to actually push higher.”
Shares in the energy sector, which weighed on shares earlier in Wall Street and Asia, rose in Europe, as oil prices recovered from a big fall on Wednesday. MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2 per cent as some technology bellwethers rebounded, with Tencent rising over 3 per cent and Alibaba more than 2 per cent. In Japan, the Nikkei jumped 1.5 per cent, recouping much of its 2.0 per cent loss the previous day, which was its biggest fall since late March.
The price of copper, seen as a barometer of global economic health because of its extensive industrial use, also fell sharply earlier this week, raising worries about the world growth outlook. Copper traded at $6,576 a tonne, up 0.5 per cent on the day and above a two-month low of $6,507.5 touched on Tuesday. — Reuters