U.S. Dollar Slips As Tax Overhaul Plan Is Unveiled

By Ira Iosebashvili Features Dow Jones Newswires

The dollar edged lower Thursday as investors reacted to details of the Republican plan to overhaul taxes.

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The Wall Street Journal Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently down less than 0.1% at 87.74.

Features of the Republican's tax overhaul, reviewed by The Wall Street Journal on Thursday, include a reduction of the corporate tax rate to 20% from 35%, fewer individual income tax brackets and a repeal of the taxes paid by large estates.

Hopes that the White House would be able to push through its tax plan have boosted the dollar in recent weeks, as some investors believe that the bill could stimulate the U.S. economy and push the Federal Reserve to raise rates at a faster pace. Expectations of rising rates are a boon to the dollar, as higher borrowing costs make the U.S. currency more attractive to market participants seeking yield.

Some investors, however, believe Republicans will find it difficult to pass the legislation in a Congress that is contending with many competing interests.

"What the bill says is one thing, getting it into legislation is a whole other animal," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.

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Investors also weighed the impact of President Donald Trump's nomination of Federal Reserve Governor Jerome Powell to be the next chairman of the U.S. central bank, which was officially announced Thursday. Less hawkish than some of the other candidates, Mr. Powell is expected to continue the Fed's approach of reversing the central bank's stimulus policies as the economy expands.

Earlier in the session, a report from payroll processor Automatic Data Processing Inc. and forecasting firm Moody's Analytics showed that firms across the country added 235,000 workers to their ranks in October. Economists surveyed by The Wall Street Journal had expected the addition of 190,000 jobs.

Investors are awaiting Friday's employment report from the Labor Department, which many view as a gauge of how the U.S. economy is performing.

Write to Ira Iosebashvili at ira.iosebashvili@wsj.com

(END) Dow Jones Newswires

November 02, 2017 17:33 ET (21:33 GMT)