US Dollar Weakens as Doubts Grow Against Trump Tax and Spending Plans

The US dollar weakened on Wednesday against the euro and the British pound, and touched its lowest level against the Japanese yen in four months. Doubts grew between investors toward the promises of President Donald Trump to cut corporate taxes and raise infrastructure spending, which have weighed on the greenback.

The US dollar had touched its highest level against the euro since 2002 in December 2016, in a rally that stemmed from Trump’s victory in the US presidential election a month earlier. The victory meant that the promises the president made during his election campaign may be brought to reality. However, more than 2 months after his inauguration, Trump has yet to reveal any details on his tax cut and fiscal spending plans.

In recent days, concerns started to grow in the market that the Trump administration might fail to deliver on its promises. Republicans revealed their healthcare reforms on March 6, which may take down the Affordable Care Act that is widely known as Obamacare. However, the Republican Party appears divided as conservatives and moderates differ on some of the suggested reforms.

Reports of last minute amends to the healthcare reforms emerged ahead of a vote that will be held in The House of Representatives and will decide whether the reforms pass. Investors are anticipating the result of the vote as it will be a gauge of the Trump administration’s ability to bring its economic plans to fruition.

Republicans have 237 seats in the House of Representatives, while Democrats hold 193 seats. The healthcare reform bill will not pass if as few as 22 Republicans voted against it, and a report published yesterday stated that 26 Republicans oppose the bill. Rising doubts toward the unity of Republicans have caused traders to choose the safety of the Japanese yen, which is now at its highest level since November 23.

EUR/USD traded at 1.0805 as of 16:45 GMT, after touching 1.0819 at 14:50 GMT, the pair’s highest level since November 14. EUR/USD started trading today at 1.0811. GBP/USD was at 1.2474, from 1.2497 at 06:45 GMT, a level last witnessed on February 24. GBP/USD was at 1.2480 when trading began today. USD/JPY traded at 110.95, from 110.81 at 14:20 GMT, the pair’s lowest level since November 24. USD/JPY started the day at 111.55.

The Dollar Index, which tracks the strength of the US currency against a basket of its major counterparts, was at 99.64 as of 16:49 GMT, the weakest level since February 1. The index was at 99.81 yesterday.

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