Dollar lowers

TOKYO: The dollar was on the defensive on Thursday as doubts for the prospects of U.S. tax reforms, a fall in U.S. stocks, and declining high-yield bond prices all soured the mood, offsetting an uptick in underlying U.S. inflation.
The dollar index stood at 93.891, after having fallen to as low as 93.402 on Wednesday, its weakest in almost four weeks, a severe correction from the uptrend that began in early September on hopes of a tax cut deal.
A U.S. Senate Republican tax plan drew fire from two Republican lawmakers on Wednesday in a possible sign of trouble for the sweeping measure, given the party can afford to lose no more than two votes to pass the legislation.
"For the moment, the U.S. tax cuts will be the main theme of the markets. I would expect negotiation to drag on beyond the year-end but by the first quarter of next year, there will be a deal," said Yukio Ishizuki, senior strategist at Daiwa Securities.
U.S. stocks and junk bonds, which had also rallied on hopes of tax cuts and the prospects of a solid U.S. economic growth, extended their losses, further dampening dollar sentiment. U.S. S&P 500 fell to a three-week low while the yield on junk bonds rose to their highest in 7 1/2 months.