LONDON (Reuters) – The dollar dipped against a basket of major currencies on Monday, on caution ahead of a vote in U.S. Congress on tax reform, after the bill moved another step closer to ratification over the weekend.
The U.S. currency had edged higher after Republicans on the House-Senate negotiating committee on Friday put the finishing touches on a sweeping tax overhaul that involves large corporate tax cuts.
But it dipped on Monday on some uncertainty that the bill would indeed be pushed through, and with some doubts creeping in over the pro-growth effect the tax reforms would have.
Against a basket of major currencies, the dollar edged down 0.2 percent to 93.800 .DXY.
Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo, said another moderate political risk to the dollar was the possibility of a U.S. government shutdown if a spending deal does not get successfully extended beyond Dec. 22.
“While the tax bill is likely to be passed and a government shutdown is also likely to be averted, both these concerns have to be assuaged before the dollar can rise,” Yamamato said.
The dollar also failed to get support from subdued U.S. Treasury yields. The long-term Treasury yield has been confined to a narrow 2.34-2.42 percent range over the past week.
“As long as U.S. yields don’t climb higher, the dollar cannot mount a sustained rise. The market only sees the Federal Reserve raising rates about twice next year, rather than the three hikes the Fed projected,” said Koji Fukaya, president of FPG Securities in Tokyo.
Bitcoin was down 1 percent at $18,764 BTC=BTSP on the Bitstamp exchange. It rose to a record high of $19,666 on Sunday, ahead of the launch of bitcoin futures from CME Group Inc (CME.O).
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