Early trade in New York: dollar weakens as US tax bill seen having limited impact

The dollar slid against most currencies except the yen on Wednesday, with the greenback seen as having limited upside potential given that investors have already factored in a comprehensive US tax bill that is all but certain to be signed into law by President Donald Trump.
"The price action in the currency market both yesterday and today, with the greenback generally on the defensive...suggest the positive implications of the tax proposal have been broadly anticipated," said Nick Bennenbroek, head of currency strategy at Wells Fargo Securities in New York.
"In essence, and as we have often seen around US Federal Reserve rate hikes, we appear to be seeing a repeat of US dollar 'buying on the rumor and selling on the fact'," he added.
The US Senate approved the tax bill early Wednesday morning, but had to send it back to the House of Representatives, which had passed it on Tuesday, for another vote due to a procedural foul-up. The outcome is not expected to change.
The bill essentially slashes taxes for corporations and the wealthy, while offering mixed, temporary tax relief to working individuals and families. In mid-morning trading, the dollar index fell 0.2 percent to 93.295. That led the euro to rise 0.3 percent versus the dollar to $1.1872
Year-end portfolio moves and a rise in German bond yields also helped the euro, analysts said. The dollar also fell against sterling, the Canadian and New Zealand dollars. Against the yen, however, the dollar rose to one-week highs and was last 113.16 yen, up 0.2 percent.