Forex - Dollar Steady in Cautious Trade

© Reuters. Dollar steady in cautious trade

Investing.com - The dollar steadied on Monday after rising to its highest level in eight months against the yen earlier as investors remained cautious amid concerns over U.S. tax reform plans.

rose to an overnight high of 114.73, the strongest level since March 15, before pulling back to trade at 114.09 by 08:39 AM ET (13:39 AM GMT).

The dollar was boosted by the divergent monetary policy outlooks between the Federal Reserve and the Bank of Japan.

BoJ Governor said on Monday that it will continue with its monetary easing policy, but added that the bank was closely watching the economic effects of prolonged stimulus.

Demand for the dollar continued to be underpinned by expectations that the Fed will stick to its plan for gradual monetary tightening.

Friday’s stronger-than-expected U.S. factory orders and service sector data saw investors look past an underwhelming jobs report for October.

The report showed a smaller than expected increase in jobs growth and a slowdown in wage growth.

The data did little to alter expectations that the Fed will raise interest rates in December for the third time this year.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 94.86, not far from the one-week high of 95.00 set overnight.

The euro edged lower, with at 1.1596, while sterling pushed higher, with rising 0.25% to 1.3108.

Investors were waiting to see how Republicans would reconcile differences over their that, if enacted, would be the biggest overhaul of the U.S. tax system since the 1980s.

It would also be the first major legislative achievement since Republicans took control of the White House and Congress in January.

Investors were also watching the progress of U.S. President Donald Trump's visit to Asia.

Trump said Monday that to sort out problems on trade between the world's biggest and third-largest economies.

Earlier, Trump vowed to push for a free and balanced trade partnership with Japan after decades of "massive trade deficits" but said relations with close ally Tokyo were "better than we have ever had".

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