Dollar supported by tax reform progress expectations; Euro fell after ECB’s decision

US dollar index

The U.S. dollar remained strong and is now currently heading for a three month high on early Friday. On the other hand, the euro was dragged down to its lowest level since July 26, following the news that ECB will prolong their bond buying. The central bank also weakened the possibilities of a future interest rate hike next year.

The index which measures the value of the U.S. currency against its major peers, the U.S. dollar index, was ahead by 0.2 percent to 94.769. This has placed the index on track for a 1.1 percent weekly gain and headed for a three-month high.

The greenback was somehow given a lift by the news that U.S. House of Representatives had a poll last on the previous day to clear the path on enacting the tax reform of Republicans. Private client group of U.S. Bank’s chief investment officer Bill Northey said he did not see any form of progress on tax reductions.

Outside the U.S., the European Central Bank (ECB) has decided to extend in bond purchase programme as long as nine months until September 2018. It also kept the door open on still buying after that and would start reducing its monthly bond buying by €30 billion (34.90 billion in USD)

In reaction to the news, the European currency edged down by 0.1 percent at $1.1631. This has placed the common currency on a three month high as it fell more than 1.3 percent on the entire week.

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