The dollar rose in Asia on Monday after US senators squeezed through a tax-cut bill at the weekend, but equities were muted on news that a former aide to Donald Trump had agreed to co-operate with a probe into Russian election interference.
After marathon talks in Washington lawmakers finally passed controversial reforms to the tax system, which the president says will fire up the world’s number two economy.
The greenback strengthened against the yen, euro and pound, though dealers remain reticent as both houses of Congress must reconcile their differing bills before sending a final draft to the White House, while analysts also warned of political risk.
“If the legislation gets ratified quickly, there would likely be another dollar bounce, but the longer this drags out, the dollar will probably sell off as political uncertainty has been the greenback’s undoing over and over again in 2017,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
Traders are keeping a close watch on Washington after former White House National Security Advisor Michael Flynn admitted lying to investigators probing possible collusion between the Trump election campaign and Moscow.
Commentators said the developments bring the probe closer to Trump and his family, while some have also leapt on a tweet by the tycoon suggesting he knew that Flynn had lied to the FBI.