Investing.com - The dollar was higher against a basket of the other major currencies on Monday after the U.S. Senate passed a tax bill at the weekend, boosting expectations for a faster pace of rate hikes from the Federal Reserve.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.34% to 93.13 by 03:44 AM ET (08:44 AM GMT).
The dollar was boosted by expectations that tax cuts for corporations will stimulate the U.S. economy, and also drive Treasury yields higher, as the government becomes more dependent on debt due to reduced tax income.
Talks were due to begin later in the week on reconciling the Senate version with a separate version already passed by the House of Representatives so a final bill can be sent to President Donald Trump to sign into law.
Investors remained cautious amid concerns over the ongoing Russia probe, following reports on Friday that former national security adviser Michael Flynn is prepared to testify against Trump in the ongoing investigation.
Flynn pleaded guilty Friday morning to lying to the Federal Bureau of Investigation about his communications with the Russian ambassador to the U.S. in December 2016. He also admitted to speaking with a top member of the Trump transition team regarding his communications with the ambassador.
The dollar gained ground against the yen, with USD/JPY advancing 0.64% to a two-and-a-half week high of 112.91.
The euro slipped lower against the dollar, with EUR/USD down 0.23% to 1.1868.
Sterling also slid lower against the dollar but losses were held in check amid hopes for progress in Britain’s Brexit talks.
GBP/USD slipped 0.16% to 1.3450, easing back from Friday’s two-month high of 1.3548.
British Prime Minister Theresa May was to meet with EU chief executive Jean-Claude Juncker and his chief Brexit negotiator Michel Barnier later Monday amid hopes that further progress in the fraught divorce negotiations.
Elsewhere, the Australian and New Zealand dollar were lower, with AUD/USD edging down to 0.7606 and NZD/USD losing 0.38% to trade at 0.6865.