The U.S. dollar gained against most of its primary trading partners on Monday morning, hitting two-week highs after the Senate passed its highly-anticipated tax bill over the weekend. If implemented, the tax bill may signal additional interest rate hikes by the Federal Reserve in the coming year. The tax bill would also implement tax cuts which could raise corporate profits and encourage share buy-backs.
The euro was down 0.20 percent against the dollar, trading at $1.1865 as of 3:04 p.m. HK/SIN. The dollar also gained against the yen, up 0.70 percent to 112.88. The dollar index was up 0.06 percent to 93.17 .DXY.
If confirmed, the proposed tax reforms would be the biggest change to U.S. tax laws in over 30 years. The expectation is that tax reductions for corporations and the wealthy would stimulate the economy in new ways and would sent Treasury yields higher. The Senate and the House of Representatives are slated to begin negotiations this week, to reconcile the differences between their respective tax bills.
Oil Prices Fall
Oil prices were lower on Monday after U.S. shale drillers added more rigs last week, but prices still remained close to mid-2015 highs after OPEC and its non-member partners agreed to extend its production cuts until the end of 2018. If implemented fully, the cuts will reduce production by 1.8 million barrels per day during the course of the agreement. U.S. WTI crude futures were down 0.72 percent to $57.94 per barrel while Brent crude futures were down 0.52 percent to $63.40 per barrel. U.S. drillers added two oil rigs last week, bringing the total count to 749 rigs, the highest numbers since September, reported Baker Hughes, an energy services firm, late on Friday. The U.S. production increase has counterbalanced OPEC’s efforts and threatened OPEC’s price-stabilization efforts. Nevertheless, analysts are hopeful that OPEC’s diligence will continue to manage the market.