December 5, 2017 / 8:52 PM / a year ago

FOREX-Dollar advances for second day on U.S. tax reform optimism

    * Dollar gains seen limited next year -ING
    * Euro seen as beneficiary of dollar weakness
    * Sterling slips, but remains on uptrend -analyst

 (Updates prices, table, adds comment)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Dec 5 (Reuters) - The dollar rose for a second
straight session on Tuesday, a day after posting its biggest
daily rise in a week, as the currency continued to benefit from
optimism surrounding U.S. tax reform.
    "The dollar will stay well-supported until we get some
clarification on the tax bill and then we will probably trade
off a little bit," said Shaun Osborne, chief FX strategist at
Scotiabank in Toronto.
    On Monday, the  Republican-controlled House of
Representatives voted to go to conference with the Senate on tax
legislation, setting up formal negotiations on the bill that 
could take weeks to complete.
    The Republican-led Senate is expected to hold a similar
conference vote later this week. 
    In late trading, the dollar index, a gauge of the
greenback's value against six major currencies, was up 0.2
percent at 93.329.
    Against the yen, the dollar gained 0.2 percent to 112.63 yen
. The euro, meanwhile, was down 0.4 percent versus the
dollar at $1.1822
    Though the dollar has recovered some after falling to a
two-month low last week, some market strategists expect further
dollar gains next year to be limited.
    "Our base case here is that a lot of the good news here is
priced into the U.S. dollar," said Scotia's Osborne. "There's
not much more upside to the dollar at this point."
    ING believes the euro will likely be the beneficiary of any
weakness in the dollar.
    In a 2018 outlook report on Tuesday, ING strategists said
they expect the euro to rise to $1.30 against the dollar next
year, a level not seen since September 2014.
    "The euro is in the sweet spot of this global recovery and
looks well-positioned for the investment cycle," said Petr
Krpata, chief EMEA FX strategist at ING in London.  
    Sterling trimmed early losses to trade down 0.2 percent at
$1.3435 as broad disappointment over the lack of a Brexit deal
prompted some investors to cut their long bets. 
    Prime Minister Theresa May failed to clinch a deal on Monday
to open talks on post-Brexit free trade with the European Union
after a tentative deal with Dublin to keep EU rules in Northern
Ireland angered her allies in Belfast.
    "I don't think this is a market that is too long sterling,
but there definitely has been an increase in the excitement
level of late with sterling/dollar staying very close to a nice
uptrend over the last several months," said W. Brad Bechtel,
managing director at Jefferies LLC in New York.
    Currency bid prices at 3:34PM (2034 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1824        $1.1864     -0.34%         +12.47%     +1.1877     +1.1801
 Dollar/Yen       JPY=        112.5800       112.4000    +0.16%         -3.67%      +112.8600   +112.3800
 Euro/Yen         EURJPY=     133.12         133.35      -0.17%         +8.10%      +133.7400   +133.0200
 Dollar/Swiss     CHF=        0.9877         0.9848      +0.29%         -2.96%      +0.9887     +0.9838
 Sterling/Dollar  GBP=        1.3442         1.3478      -0.27%         +8.97%      +1.3482     +1.3373
 Dollar/Canadian  CAD=        1.2692         1.2668      +0.19%         -5.50%      +1.2704     +1.2624
 Australian/Doll  AUD=        0.7610         0.7598      +0.16%         +5.47%      +0.7653     +0.7598
 Euro/Swiss       EURCHF=     1.1680         1.1686      -0.05%         +8.99%      +1.1703     +1.1661
 Euro/Sterling    EURGBP=     0.8793         0.8802      -0.10%         +3.23%      +0.8867     +0.8780
 NZ               NZD=        0.6879         0.6856      +0.34%         -0.89%      +0.6907     +0.6852
 Dollar/Norway    NOK=        8.2592         8.3224      -0.76%         -4.37%      +8.3614     +8.2550
 Euro/Norway      EURNOK=     9.7669         9.8775      -1.12%         +7.50%      +9.9188     +9.7452
 Dollar/Sweden    SEK=        8.3696         8.4182      -0.94%         -8.10%      +8.4571     +8.3600
 Euro/Sweden      EURSEK=     9.8961         9.9902      -0.94%         +3.30%      +10.0145    +9.8740
All spots FX= 
Tokyo spots AFX= 
Europe spots EFX= 
Volatilities FXVOL= 
Tokyo Forex market info from BOJ TKYFX World central bank news
Economic Forecasts... ECON   Official rates...INT/RATE
Forex Diary.......MI/DIARY   Top events........M/DIARY
Diaries...........DIARY Diaries Index........IND/DIARY
Press Digests.....PRESS Polls on G7 economies..SURVEY/
European markets......MARKETS/))

 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Saikat Chatterjee in London; Editing by Phil Berlowitz and Dan
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