The Dollar is rising against most currencies, after optimistic US housing data

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The US dollar saw gains against the major currencies on Tuesday, supported by optimistic US housing data. However, the gains remain limited by persistent doubts about the impact of the US tax overhaul plan on the economy.

The US Congress will vote later today on a draft of the biggest changes to the US tax law for nearly 30 years. The US House of Representatives, which began its initial tax legislation six weeks ago, said the draft resolution would come into effect after it was passed on Tuesday afternoon.

As the stock markets around the world rose this week on hopes of a US tax cut, the US dollar remained silent and stable. Most traders believe that most of the positive impact of corporate tax cuts has already happened, while expectations suggest that tax reform will lead to the “repatriating” of a wave of dollars. The changing of the tax law was created, partly, to give US multinationals a reason to return nearly $2.6 trillion of accumulated profits to the US. Analysts claim it is unclear whether this law will lead to a big change in investments in addition to the balance of payments.

The greenback rallied against other major currencies after strong data showed that domestic home construction rose to record highs. The dollar rose 0.44% against the yen, trading at 113.2 yen per dollar. It also rose against the Swiss franc, the British pound, the Australian dollar, the Canadian dollar and the New Zealand dollar. However, the dollar was weak against the euro as the euro rose 0.26% against the dollar and the pair traded at $1.1812 per euro. So far, the EU currency has gained more than 12 percent against the dollar this year and is on track for its strongest annual performance since 2004.

According to analysts and market participants it is very difficult to call for a significant increase in the value of US revenues when inflation is low, which in turn leads to a restriction on the value of the US dollar.