The dollar lost some steam on Thursday after surging on optimism following the release of the GOP’s tax reform plans on Wednesday. The plan called for a lower corporate tax rate and would cut the highest individual income tax rate. Criticism, however, arose over how the plan was skewed toward the wealthy, while questions remained over how the tax cuts would be funded.
The dollar index, which tracks the greenback against a basket of rivals, stood at 93.183 by 8:04 a.m. HK/SIN after climbing as high as 93.666 overnight.
The pullback in the U.S. currency was likely due to the “reality check setting in that the road to reform will be a long and winding trek — and an extremely bumpy one at that based on the current GOP squabbling,” said Stephen Innes, APAC head of trading at OANDA, in a note.
U.S. stocks closed higher as investors weighed recently announced tax reform plans. The Dow Jones industrial average rose 0.18 percent, or 40.49 points, to close at 22,381.20 and the small-cap Russell 2000 finished the session at a record 1,488.79.
Meanwhile, Kansas City Fed President Esther George, a non-voting member this year, said on Thursday that continued, gradual interest rate hikes were appropriate for economic expansion, Reuters said.
Back in Asia, investors also digested the release of economic data out of Japan: August core consumer prices rose 0.7 percent compared with one year ago, marking an eighth consecutive month of yearly increases, according to Reuters. Retail sales increased 1.7 percent last month compared with the previous year, missing a median estimate for a 2.6 percent rise, Reuters said.
Industrial production data, however, beat forecasts. August figures showed an increase of 2.1 percent compared with the previous month, above the 1.9 percent median forecast, Reuters said.
In corporate news, Toshiba on Thursday signed an agreement to sell its memory chip unit to a group led by Bain Capital for 2 trillion yen ($18 billion). Still, the saga has yet to conclude: Western Digital, which is involved in a joint venture with the Japanese conglomerate, has sought an injunction to prevent Toshiba from selling the unit. Toshiba stock was up 0.98 percent in early trade.
On the energy front, oil clawed back gains after sliding around 1 percent overnight. U.S. crude futures rose 0.04 percent to trade at $51.58 a barrel and global benchmark Brent crude advanced 0.35 percent to trade at $57.61.
Brent had climbed to a 26-month high of $59.49 earlier this week following a threat by Turkey to shut down an oil pipeline following an independence referendum in the semiautonomous Kurdish region.