The Australian dollar hit a new 2017 high overnight, as the greenback sagged after US Treasury Secretary Steve Mnuchin made it clear any structural reforms by the Trump administration will take time to boost the economy.
The Aussie rose as far as US77.41¢ overnight, its highest level since the immediate aftermath of the US elections in November, before consolidating around US77.15¢ on Friday morning.
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Aussie dollar surges past US77c
The Australian dollar clears the US77c mark, its highest since the US election. Vision courtesy: ABC News 24.
The new high extends a strong rise since the beginning of the year - the Aussie has soared against most major currencies, leading some to suspect investors are stocking up on the currency to gain exposure to forecast strong growth in Asia.
Mr Mnuchin flagged "very significant" tax reform focusing on middle-income tax cuts, simplification and lower company taxes, and added the Trump administration was still studying a proposed border tax on imports.
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"We want to get this done by the August recess," he told CNBC, acknowledging in another interview that such a timeline was "very aggressive".
But he also noted that any boost to GDP growth from the new administration's policies, which have yet to be detailed, would be a long-term story, saying tax reform wouldn't boost economic growth to 3 per cent before late 2018.
Investors were disappointed by the lack of detail around tax reform, while Wednesday's more dovish than expected US Federal Reserve meeting minutes also continued to weigh on the greenback.
"The market is continuing to wait for the important details of the tax/fiscal plans, the absence of any infrastructure details, and that Mnuchin said that the step-up in growth to 3 per cent may not occur until late 2018," NAB economist David de Garis said.
Mr Mnuchin also signalled no urgency to designate China a currency manipulator, saying he wanted to use a regular review of foreign-exchange markets to determine if the US's largest trading partner was cheating.
Earlier this week, Deutsche Bank chief economist Adam Boyton said the dollar could push beyond US80¢ - a level it hasn't traded at since May 2015 - off the back of Australia's resurgent exports. The Australian dollar has yet to break through the US78¢ barrier this year.
Reserve Bank of Australia governor Philip Lowe is facing the House of Representatives on Friday, which may provide further momentum for the currency. Mr Lowe will be asked to address a series of disappointing economic figures out this week - including weak private sector wage growth and lower than expected business investment.