© Reuters. Dollar index near 1-month highs in the middle of the US tax reform, interest rate hike hopes
Investing.com — The dollar rose to one-month highs against a basket of other major currencies on Thursday, amid fresh hopes for US tax reforms and strong economic data supported the case for a Federal Reserve interest rate increase later this year.
The US dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.17% 93.44 03:28 PM ET (07:28 GMT), the highest since August 23.
The dollar was strengthened, after the trump card-the administration proposes outlined plans for a radical overhaul of the U.S. tax law on Wednesday, tax cuts for businesses and many individuals.
The proposed changes are likely to face an uphill battle in Congress amid concerns that it could add trillions of dollars to the deficit.
But progress on the tax plan, together with data showing a strong rebound in orders for long-lasting U.S. factory goods last month strengthened the dollar, which was driven by new expectations for a third rate hike by the Fed this year
Higher prices support the dollar, by searching the U.S. currency more attractive to yield-seeking investors.
The dollar was higher against the yen, with USD/JPY rising 0.17% to 113.03, not far from Wednesday’s more than two-month high of 113.24.
The euro remained close to five-week lows amid concern about the political risks in Germany in the aftermath of weekend elections, EUR/USD is last at 1.1742.
German Chancellor Angela Merkel is faced with what could try to a long time of the coalition negotiations to form a stable government, investors leave worried that the political uncertainty could make it difficult to beat the German economy closer to the euro-zone integration.
Elsewhere, sterling was firm against the stronger dollar, with GBP/USD at 1.3382.