Dollar Shakes Off Weakness against Yen

The dollar rose on Thursday, effectively shaking off earlier losses against Yen. Investors also showed signs of improving risk appetites, boosting the dollar. The U.S. tax reforms were also shown optimistic support, providing the dollar with more support.

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The greenback grew 0.1 percent at 112.380 yen following a fall of 0.25 percent overnight.

The fall happened after U.S. President Donald recognized Jerusalem as the capital of Israel on Wednesday. This jeopardized Middle East peace efforts and caused distress on both of Washington’s friends and foes.

“The impact of the ‘risk off’ moves that weakened the dollar against the yen stemming from the Middle East developments appears to have been limited. It likely served as a pretext for speculators to cover some yen shorts,” said senior currency strategist Yukio Ishizuki.

“We could still see participants try to sell the dollar on upcoming ‘risk off’ events. But the dollar is positioned to absorb much of the selling pressure, with many players poised to buy on dips,” he added.

USD/JPY grew on Thursday the same time that Tokyo shares surged, which had slumped due to Middle East concerns the day before.

Observers noted that the USD/JPY rise seemed to be limited, especially considering Nikkei’s 1.45 percent gain.

The dollar index experienced little change at 93.543. This followed a rise to 93.650 overnight, which was its highest since November 22.

The euro was secure at $1.1803 after it fell 0.25 percent overnight, hitting its two-week low of $1.1780.

The Canadian dollar (CAD) was flat at C$0.9895 a dollar after a decline of 0.8 percent the day before.

The Australian dollar (AUD) was 0.2 percent lower at $0.7548.

A fall of 0.3 percent on the day was experience by the New Zealand dollar (NZD) at $0.6859.

British pound fell 0.1 percent at $1.3383 following a one-week low of $1.3358 overnight.

U.S. Tax Legislation

The U.S. currency climbed to a two-week high against a basket of six major currencies.

This increase was due to the growing optimism regarding the U.S. lawmakers making progress on the tax legislation. Another cause was the upbeat U.S. private-sector employment data published on Wednesday.

An agreement was settled between the U.S. Senate Republicans and the House of Representatives on sweeping tax legislation on Wednesday. The deal was made as early signs showed that lawmakers might bridge their differences and have the final bill before their self-imposed deadline on December 22.

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