LONDON – The dollar held near the day’s lows against a trade-weighted basket of its rivals and is set for its biggest weekly loss in more than a month as investors locked in gains awaiting progress of a landmark U.S. tax bill.
Congressional Republicans took important steps toward the biggest U.S. tax-code overhaul since the 1980s, with the House of Representatives approving a broad package of tax cuts, and a Senate panel advancing its own version of the legislation sought by senior lawmakers and President Donald Trump.
“We are seeing a very choppy ending to the week on the dollar with market liquidity thinning out and the key to more dollar upside lies in the progress of the U.S. tax bill,” said Alvin Tan, an FX strategist at Societe Generale in London.
The euro held around the $1.18 line against the dollar and held just below a one-month high of $1.1862 tested.
Against a broad trade-weighted basket of its rivals, the dollar was down 0.3 percent to 93.508 and was set for a second consecutive week of losses.
The greenback also came under pressure after a Wall Street Journal report that investigators probing possible Russian interference in the 2016 U.S. election had subpoenaed President Donald Trump’s election campaign for documents.
Also weighing on the dollar was a return in risk appetite in the second half of the week with a broad swathe of emerging market currencies led by the Indian rupee which is up nearly half a percent.
Peter Fitzgerald, global head of multi-assets at Aviva Investors, who oversees 132 billion pounds ($174.20 billion) in assets, told the Reuters Global Investment Outlook Summit this week that going long large-cap emerging equities and short on large-cap developed market stocks had done reasonably well in 2017, and would continue to make money next year.