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US dollar hampered by tax plan worries; hawkish RBNZ buoys kiwi

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The US dollar inched higher versus a basket of currencies on Thursday, but its near-term outlook was seen clouded by worries over possible delays to US President Donald Trump's tax reform plans.

[SINGAPORE] The US dollar inched higher versus a basket of currencies on Thursday, but its near-term outlook was seen clouded by worries over possible delays to US President Donald Trump's tax reform plans.

The dollar last stood at 94.926 versus a basket of six major currencies, up 0.1 per cent on the day but staying below a three-month high of 95.150 set in late October.

The New Zealand dollar touched a two-week high after comments from the country's central bank on the inflation outlook were taken as hawkish, even as it kept interest rates unchanged as expected.

Earlier, the New Zealand dollar rose to as high as US$0.6974 , its highest level since Oct 24. It later came off that peak and was last trading at US$0.6950.

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Analysts said the broader market focus was on the fate of the Trump administration's tax reform plans.

A US Senate tax-cut bill, differing from one in the House of Representatives, was expected to be unveiled on Thursday, complicating a Republican tax overhaul push and increasing scepticism on Wall Street about the effort.

"There's very much a risk of disappointment," said Steven Dooley, currency strategist for Western Union Business Solutions in Melbourne.

"The US dollar could go through a weakening phase on the back of uncertainty around that tax reform," Mr Dooley said, referring to the near-term outlook.

Against the yen, the dollar edged up 0.1 per cent to 113.98 yen, but remained below an eight-month high of 114.735 yen set on Monday.

The euro held steady at US$1.1588, staying above a low of US$1.1553 set on Tuesday, which was the euro's lowest level since July 20.

The US dollar has been supported against the yen and the euro recently, partly due to expectations for the Federal Reserve to raise interest rates in December for a third time this year and for further Fed policy tightening next year.

REUTERS

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