The US dollar has risen against a basket of currencies Monday, following news the US senate passed the latest version of the US tax reform bill, on its journey to become law. However, gains were tempered by concerns over the upward path of interest rates in 2018.
By 1050 BST, the US dollar index was 0.44% higher at 93.22. That’s a significant recovery from the 92.59 it touched on Friday.
Tax plan success
The US senate voted to pass the amended version of the tax reform bill early Saturday. In a 51-49 vote, the latest version of the bill will now be debated and compared with a different version created by the House.
If an agreement an be reached, it will then be voted into law.
However, there are concerns the US tax reforms will benefit corporations and the wealthy, while being less positive for regular, working Americans.
Further adding to the division between the Republicans and Democrats, is that the latest bill was handed to the Senate just a few hours before the vote took place.
The document was 500-pages long, which suggests it was impossible for anyone who voted, to have had enough time to properly peruse the amended tax reform bill.
No Democrats voted in favour of passing the bill and one Republican also voted against it. But Trump’s 52-48 majority, meant it went through with only Republican support.
If the tax reform bill is eventually passed into law, it will represent the first legislative victory for President Trump.
Investors appear generally enthused about the potential tax reform plan – which would represent the biggest overhaul in over 30 years. However, they are also concerned the plan could slow the pace of potential interest rate hikes next year.
“There is some broad optimism generated on the U.S. tax plan’s passage through the Senate, but it remains to be seen how much it will translate into higher U.S. interest rates next year,” said Christin Tuxen, an FX strategist at Danske Bank, according to a Reuters report.