Healthcare Bill Practically Dead Causes Major U.S. Dollar Losses

 

USD

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.  

 

EUR 

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 leadership. 

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.  

 

GBP  

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.