Tax Reform Promises Causes Dollar to Rise

The U.S. dollar was up against a basket of international currencies on Friday, after President Donald Trump reiterated a promise to revamp tax reforms. The campaign promise has been high on the President’s agenda, and on Thursday he confirmed that a ‘phenomenal’ tax reform will occur over the next two to three weeks. “The underlying bigger story in the last 24 hours is that Trump has put the reflation trade back on the front foot by talking about a tremendous tax program,” said Richard Franulovich, currency strategist at Westpac Banking Corp in New York.

The U.S. dollar saw some fluctuation during a joint news conference held with the Prime Minister of Japan Shinzo Abe. President Trump seemed to backtrack or at least avoid comments he made during his campaign of Japan stealing American jobs. In recent times, Trump had called out Japan and other countries for devaluing their currencies, a move deemed detrimental to the United States. “As far as the currency devaluations, I have been complaining about that for a very long time,” the president said. He vowed that the U.S., Japan and China would soon be on ‘a level playing field’. “That’s the only way it’s fair,” Trump said. “That’s the only way you can fairly compete in trade and other things. We will be on that field and we will all be working very hard to do great for our country but it has to be fair and we will make it fair.” Following his comments on devaluation, the US dollar dipped against the yen sharply, going below 113, but bounced back soon after. The euro also lost ground to the dollar, dipping by 0.2 percent to $1.0631, during the last trade, though it is an improvement on the $1.0608 reached before the news conference.