Asian markets mostly rose Wednesday as investors await the Federal Reserve’s latest policy meeting, but the dollar slipped as a shock Democrat poll win in a staunch Republican Senate seat fuelled fears about Donald Trump’s tax cut plans.
The Dow and S&P 500 clocked up records on Wall Street, lifted by financials ahead of an expected interest rate hike by the Fed.
Bloomberg News late Tuesday reported Republican senators as saying lawmakers in both houses of Congress were making progress in reconciling two tax reform bills and a final draft could be agreed imminently and it could go to a vote by next Tuesday.
Bets on the market-friendly tax cuts being introduced helped drive a surge in global markets this year and while equities have stuttered in recent weeks analysts suggested more gains could come.
However, Doug Jones’ victory over the controversial Roy Moore in the usually deep-red Alabama Senate vote cut the Republicans’ majority to 51-49, meaning any wavering could see them fail to push the tax cuts through.
That sent the dollar falling from 113.51 yen to as low as 113.13 yen before it edged back slightly.
“We could be in for a brush of bad news for the dollar with the latest Alabama election results shifting to Democrat Doug Jones,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
“Given that this result could present some headwinds to US equity markets, dollar negativity will most likely be expressed through the dollar-yen.”
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