Healthcare bill practically dead causes major U.S. Dollar losses
The U.S. Dollar is down after last night’s public announcements by
two more senators who would not vote for the healthcare overhaul bill, essentially
killing the legislation. Consequently,
the greenback is down against every currency across the board with Pound being
the exception. The Euro climbed further against the dollar to a 14-month high.
Overall, this is not good for the dollar moving forward as gridlock in
Washington now casts further doubt on the administration’s ability to push its
economic agenda. Political instability is never positive for any nation’s
currency and we are no exception.
We are now facing
multiple negative factors for the dollar including dwindling economic indicators
that puts the Fed’s hike outlook into question. Without much in terms of
heavy data until next week, we foresee a struggling buck for the week and
majors may reach new best-of-year ranges against it.
The Euro reached its best levels in 14 months following news of the
healthcare bill failing to even come to the senate floor. Four senators from the Republican side
of the aisle are causing havoc for an administration eager for a legislative
win in order to propel other items, especially on the economic front. However,
the comparison between the Eurozone and the U.S. is starting to show some stark
differences with the supposed political risk that was to bring Euro down in
2017 already out of the equation after elections that united the pro-EU
The tables have turned. A more confident European Central Bank will meet on Thursday to
potentially improve the Euro’s fortunes with some optimistic, yet cautious,
analysis while odds of a rate increase in the U.S. are now below 50.0%. The
recipe is there for Euro appreciation and this latest development in the U.S.
has created new support and resistance levels.
The Pound fell as a result of slow inflationary growth as revealed
by consumer Price Index and Producer Price Index figures. CPI did not go up or down for the month
of June and now sits at 2.6% annual-growth for the year under the expected
2.9%. Additionally, PPI did not improve at all in June while lowering its
annual average pace to 3.3% under the estimated 3.4%.
Slowdown in the middle of negotiations
does not bode well for Sterling as the UK readies itself for further
concessions at the divorce proceedings with the EU. Domestically, the British
Brexit team is even being mocked by the public for seeming less prepared than
their EU counterparts at the meetings yesterday.