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, Reuters reported.
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.
The euro benefited from the dollar's weakness, gaining a quarter of a percent to $1.1777 EUR=.
“We’re seeing some upward pressure on the euro because we’re waiting to see what’s going on in the US with the tax reform bill, so long dollar positions are covered before the decision takes place,” said Soeren Hettler, a currency strategist at DZ Bank in Frankfurt.
“There is a lot of had been doubt that this will be the historic tax reform that promised,” added Hettler.
Top Republicans are confident Congress will now pass the tax bill this week, with a Senate vote as early as Tuesday and President Donald Trump aiming to sign the bill by week’s end.
The dollar was effectively flat at 112.70 yen JPY= following Friday's rise of 0.2 percent.
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).