Dollar jumps on US tax-cut passage

The passage of Donald Trump's tax-cut plans through the senate was mixed at the weekend with news that one of his former National Security Advisor had agreed to co-operate with an investigation into possible Russian meddling in last year's election

London (AFP) – The dollar advanced against major rivals Monday after US senators squeezed through a tax-cut bill at the weekend.

Elsewhere, European stock markets rallied and Asian indices diverged as traders awaited a key Brussels summit on Brexit and digested news that a former aide to Donald Trump had agreed to co-operate with a probe into Russian election interference.

Around 1030 GMT, Europe’s leading stock markets had managed gains of around one percent from Friday’s closing levels.

Earlier in Asia, Hong Kong ended higher but there were falls for Tokyo and Shanghai.

Oil prices were down after Friday’s rally in reaction to a decision by crude producers to extend a period of production limits.

Bitcoin meanwhile reached a fresh all-time high Monday, at $11,845.33, after a US regulator cleared the way for futures in the unit to trade on major exchanges.

The Chicago Mercantile Exchange — the world’s biggest futures exchange — has said it will launch futures contracts on December 17.

“The fact that CME — the biggest kid on the block — is moving early into cryptocurrency will force other major exchanges to follow suit in the fear of not missing out,” said Shane Chanel at ASR Wealth Advisers. 

The unit has risen 15-fold since the start of the year.

In foreign exchange trading meanwhile, “the US dollar began the week on the front foot after the… tax plans were approved, opening the door to a vast fiscal stimulus for the US economy”, noted  Neil Wilson, senior market analyst at ETX Capital.

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 one 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.

The dollar’s advance helped to boost the share prices of European exporters, while the pound was downbeat also on Brexit uncertainty.

British Prime Minister Theresa May was hoping to seal a deal Monday on divorce terms with EU chiefs, with the Irish border still the key stumbling block as months of tense talks reach a decisive moment.

Traders were keeping a close watch also 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.

Elsewhere on Monday, oil prices eased on profit-taking after crude jumped almost two percent on Friday in reaction to a deal between OPEC and Russia to extend production caps through to the end of next year.

– Key figures around 1030 GMT –  

London – FTSE 100: UP 0.8 percent at 7,356.24 points

Frankfurt – DAX 30: UP 1.1 percent at 12,883.8

Paris – CAC 40: UP 0.8 percent at 5,361.77

EURO STOXX 50: UP 0.9 percent at 3,557.85

Tokyo – Nikkei 225: DOWN 0.5 percent at 22,707.16 (close)

Hong Kong – Hang Seng: UP 0.2 percent at 29,138.28 (close)

Shanghai – Composite: DOWN 0.2 percent at 3,309.62 (close)

New York – DOW: DOWN 0.2 percent at 24,231.59 (close)

Euro/dollar: DOWN at $1.1855 from $1.1898 at 2200 GMT

Pound/dollar: DOWN at $1.3432 from $1.3477 

Dollar/yen: UP at 112.90 yen from 112.12 yen

Oil – Brent North Sea: DOWN 54 cents at $63.20 per barrel

Oil – West Texas Intermediate: DOWN 62 cents at $57.74