Dollar inches lower for third day in New York

The dollar slipped for a third straight day on Thursday in thin trading, with investors hesitant to make big bets ahead of the holidays, as market participants digested a US tax reform plan that so far has had limited impact on the currency. Going into the year-end, the greenback was on track to post its worst annual performance in 14 years. The medium-term outlook for the dollar though has turned a little more positive than what many on Wall Street had priced in. That is due to expected rate hikes from the Federal Reserve next year and, at the very least, some benefits from the US tax program.
The Republican-controlled US Congress this week approved a broad package of tax cuts in what has been described as the largest overhaul of the tax code in 30 years. President Donald Trump could sign the tax bill into law soon. "The tax cuts, which were a major campaign promise of the Trump team, have had a smaller impact on the dollar thus far, than many had expected earlier in the year," said Omer Esiner, chief market analyst, at Commonwealth Foreign Exchange in Washington.
Esiner believes the tax package will ultimately do very little to boost US employment. Thursday's US economic data, however, provided some brief support for the dollar earlier. But as trading desks started to thin out ahead of the holidays, the dollar has settled near the lower end of its trading ranges.
Data showed that the US economy grew at 3.2 percent in the third quarter, its fastest pace in more than two years, boosted by robust business spending. The Philadelphia Fed business conditions index for December was also solid, with a higher-than-expected reading of 26.2.
In late trading, the dollar was slightly lower against a currency basket at 93.264. The euro was up modestly against the dollar at $1.1873, having gained around 1 percent so far this week, supported by a rise in German bond yields.
Against the yen, the dollar hit a more than one-week high after comments by Bank of Japan Governor Haruhiko Kuroda reinforced expectations that the BOJ was in no hurry to move away from its ultra-loose monetary policy. Some investors had expected hints that such a policy might be coming to an end and the BOJ might raise its yield target for Japanese government bonds, after a recent speech by Kuroda referring to the negative effects of ultra-expansionary monetary policy The dollar was last at 113.32 yen, down slightly on the day.