The Australian dollar is slightly higher against its US counterpart after the greenback fell following the release of President Donald Trump’s tax reform proposal.

At 0635 AEDT on Friday, the Australian dollar was worth 77.19 US cents, up from 77.12 US cents on Thursday.

The US dollar fell to its lowest in a week against a basket of major currencies on Thursday after Republicans in the US House of Representatives released proposals to overhaul the tax code.

The legislation called for slashing the corporate tax rate to 20 per cent from 35 per cent and reducing the number of tax brackets for individuals, according to a summary document obtained by Reuters.

Analysts said the proposals put forth were both unlikely to gather sufficient support in Congress and unlikely to have significant impact on the US economy.

Westpac’s Imre Speizer said US dollar did claw back some ground, while the Australian dollar’s performance stood out from the crowd.

“The US dollar index was volatile, falling after the tax plan but recovering later to be down 0.1 per cent on the day,” he said in a morning note.

“Outperformer AUD preserved earlier data-related gains, nudging higher to 0.7730 (US cents).”

The key event risk for the local currency on Friday would be September’s retail sales data.

“September retail sales is expected to rise 0.4 per cent (while Westpac expects 0.3 per cent), a relatively weak recovery from falls in July-August totalling 0.6 per cent.

“That is then seen to leave Q3 real retail trade flat (Westpac -0.1 per cent) as discounting, particularly in the food sector (40 per cent of retail), provides a slight offset.”

He could see the local currency as rising towards 78 US cents “if the US dollar continues to stall.”

The Aussie dollar is also higher against the yen and the euro.

AAP

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