The dollar slipped to a nine-day low against the yen on Friday, after wrangling in the United States Congress over a Bill to change the tax code dented confidence that the reforms would be pushed through in their current state.
The greenback had climbed to a one-month high of 113.750 yen on Tuesday. But it made a U-turn midweek after the Federal Reserve raised interest rates as expected but also expressed concern about low inflation.
The dollar lost further ground after two US Republican senators had on Thursday were reported to have sought changes to the proposed legislation to overhaul the US tax code. The US currency slipped to 112.035 yen on Friday, down 0.3 per cent on the day.
“In the end the effect will depend a lot on the details of the final tax Bill,” said Commerzbank currency strategist Esther Reichelt, in Frankfurt. “The more the tax Bill gets watered down, the less pronounced the effect will be on the dollar.”
The tax Bill needs a simple majority to pass in the Senate, in which Republicans hold just 52 of the 100 seats, and no Democrats are expected to support it. Democrat Doug Jones had won the contest for a US senate seat on Tuesday in Alabama, a Republican stronghold, trimming the Republicans' already narrow Senate majority.
“The overall process of overhauling the tax Bill is not in peril. That said, even if the tax Bill is passed and becomes law, the positive impact on the dollar could be limited as the market has already priced in such a scenario for the most part," said Shin Kadota, senior strategist at Barclays in Tokyo.
ECB policy stance
The euro edged up 0.1 per cent to $1.1792 after losing about 0.4 per cent on Thursday. The common currency flagged after the European Central Bank had on Thursday raised the growth and inflation forecasts for the euro area, but stuck with its pledge to provide stimulus for as long as needed.
The New Zealand dollar was the biggest mover among major currencies, up 0.6 per cent at a two-month high of $0.7029 after the country's finance minister Grant Robertson said he was comfortable with the currency's general trend.
Bitcoin
Bitcoin was on track for its smallest weekly move since October, with trading having turned less volatile following the start of trading of Cboe Global Markets' bitcoin futures. Rival CME Group will launch its own version on Sunday. The cryptocurrency was trading close to a record high around $17,000 on the Bitstamp exchange, having climbed around 15 per cent since Monday - the fifth straight week of gains.