The Australian dollar has slipped against its US counterpart which has strengthened on increased optimism for US president Donald Trump’s tax reform plan after the US Senate approved a budget blueprint.

At 0635 AEDT on Monday, the Australian dollar was worth 78.17 US cents, down from 78.45 US cents on Friday.

US Republican Senator Rand Paul appeared to back the administration’s sweeping tax cut plan, saying he was “all in” for massive tax cuts, even as the Senate passed a key budget measure without his support one day earlier, Reuters said.

The dollar index, tracking the greenback against a basket of major currencies, rose 0.49 per cent, its biggest daily gain in a month.

Bets that Trump’s planned tax cuts, infrastructure spending and other pro-business measures would push up growth and inflation had been behind a reflation trade that propelled the US dollar to 14-year highs earlier this year.

Meanwhile, the Aussie dollar is higher against the yen and fractionally up against the euro.

AAP

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