US dollar holds modest gains, rise slows with next phase in tax saga awaited

[TOKYO] The US dollar held on to modest gains against its peers on Tuesday, with its rise made at the week's start slowing as the market awaited the next phase of the US tax reform saga for cues.

The US dollar was a shade higher at 112.500 yen.

The greenback had climbed to a 2-1/2-week high of 113.090 the previous day, boosted by the US Senate's approval of the US tax bill over the weekend.

But it was unable to remain above the 113.000 yen threshold. The Senate must now reconcile its version of the bill with legislation passed by the House of Representatives, a process that could face a few speed bumps along the way.

"A large portion of the enthusiasm for the tax bill passing the Senate had already been factored in when (Republican Senator John) McCain gave his endorsement last week," said Shin Kadota, senior strategist at Barclays in Tokyo, explaining the US dollar's loss of momentum.

"The upcoming negotiations on the bill between the Senate and the House are likely to decide the dollar's direction this week."

The euro was steady at US$1.1867 after losing 0.3 per cent overnight.

The US dollar index against a basket of six major currencies was little changed at 93.113 after gaining about 0.3 per cent the previous day.

The pound was little changed at US$1.3474 after wide swings the previous day.

Sterling initially spiked to US$1.3538 on Monday on hopes that divorce talks between Britain and the European Union would make headway. But it slumped to US$1.3415 after European Commission President Jean-Claude Juncker and British Prime Minister Theresa May failed to reach an agreement.

The Australian dollar nudged up 0.1 per cent to US$0.7603.

The Aussie awaited the Reserve Bank of Australia's interest rate decision later in the session. Analysts polled by Reuters expected the RBA to keep its cash rate at a record low of 1.5 per cent.

The New Zealand dollar climbed 0.1 per cent to US$0.6866 after dropping 0.4 per cent on Monday.

REUTERS