Dollar Dumped as Trumpcare Fails

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Market Drivers July 18, 2017
Dollar takes a beating across the board
UK inflation data softer
Nikkei 0.44% Dax -0.59%
Oil $46/bbl
Gold $1235/oz.

Europe and Asia:
NZD CPI 0.0% vs. 0.2%
AUD RBA Minutes bullish
GBP UK CPI 2.6% vs. 2.9%
EUR ZEW 17.5 vs. 18

North America:
No Data

It’s been an unusually active night in FX markets in both Asian and early European trade as the dollar took it on the chin after news came out that Senate failed in its effort to pass President Trump’s healthcare replacement of the Affordable Care Act.

With two more senators coming out against the bill, the legislation is dead in the water and will now be likely to be shelved until the next Congressional session at the earliest. The news was seen as major political defeat by Trump and given the already negative sentiment towards the dollar, helped to propel many major pairs to multi-month highs.

The EURUSD soared through 1.1500 and then through the 1.1550 level while Aussie took out the .7900 figure and now looks to challenge the psychologically key .8000 figure. The moves are driven by momentum now as there is little economic news on the US calendar. However, last week poor Retail Sales results really dented expectations of another Fed rate hike with Fed funds futures now pricing in less than a 50% probability by December. Unless US data shows signs of improvement the prospect of further dollar weakness is likely and EURUSD could gun for 1.1600 while Aussie targets .8000 as the week proceeds.

Boris Schlossberg
Managing Director

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