The US dollar surged against a basket of its major peers on Wednesday, after Donald Trump spoke in Congress earlier today about a number of anticipated issues, including US tax reform, foreign trade, and deregulation.
The highly awaited speech lowered investorsâ concerns, as the US president said that he supports free trade as long as it remains fair. He also added that a tax reform is being developed by his team, and should provide American people and companies with reduced tax rates.
However, Trump did not give any details on his plans for the tax reform or his promise to increase fiscal spending. Instead, the president chose a rhetoric tone that seemed to calm some of the concerns investors had. But on the other hand, his tone maintained the lack of clarity surrounding the White Houseâs road for the tax system, the infrastructure spending, and the US economic growth in the near term.
Meanwhile, a number of policymakers in the Federal Reserve also spoke today, including Federal Reserve Bank of New York President William Dudley. Dudley, who is also the vice chairman of the Federal Open Market Committee, said that tightening monetary policy in the United States has become a lot more compelling. He added that economic and labor data is appearing strong enough for an interest rate hike.
San Francisco Federal Reserve President John Williams also supported tighter monetary policy, as he said in a speech to the Santa Cruz Chamber of Commerce that he sees no need to delay raising interest rates. The US dollar is often supported by higher rates in the United States.
EUR/USD traded at 1.0535 as of 14:40 GMT on Wednesday, from 1.0520 at 13:35 GMT, the pairâs lowest level since February 22. EUR/USD started the day at 1.0565.
The Dollar Index, which tracks the performance of the US currency against a basket of its major peers, was at 101.88 as of 14:34 GMT, from 101.12 yesterday.
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