The U.S. dollar ended the week with a muted market reaction as the Trump administration pulled the healthcare bill as there was a lack of support from Republicans to pass the bill into law. The Trump administration has lost momentum as their choice of policies to champion out of the gate were not the ones the market expected after a Trump win in the U.S. election. The comments from House Speaker Ryan and President Trump is now to focus on pro-growth policies which were the ones that sparked the Trump trade, also known as the Reflation trade.
The week of March 27 to 31 will feature a light economic data calendar with the highlight being the German Business Confidence on Monday, March 27 at 4:00 am EDT, the U.S. Consumer Confidence on Tuesday, March 28 at 10:00 am.
The silver lining for the dollar on the failure to push the healthcare bill is that it clear the way for awaited reforms such as taxes and infrastructure spending. Treasury Secretary Steve Mnuchin said earlier today that a tax overhaul was coming soon even before of the healthcare bill was pulled. In his words tax reform is a lot simpler than health care. FOMC speakers will be also front and center with Evans, Kaplan, and Kashkari set to speak at several events during the week.
The euro/U.S. dollar (EUR/USD) currency pair gained 0.542% in the last five trading days. The single currency is trading at 1.0805 as President Trump's healthcare bill faces strong opposition. The President has declared that if the bill is not approved on Friday he will leave Obamacare in place.
There were few economic indicators released this week in Europe and the United States. Unemployment claims in the U.S. came in higher than expected at 261,000 with core durable goods also missing forecasts with a 0.4% gain.
The Trump administration is proving to be one of the fastest to lose the post election momentum. When he was the president-elect Trump was able to get markets excited with the promise of pro-growth policies focused on tax stimulus and infrastructure spending. The Trump trade started to crumble when due to political reasons the first policies signed by President Trump were aimed at immigration, anti-trade and now healthcare reform facing tough opposition form the Democratic party and in the case of healthcare even from Republicans.
On Monday, March 27 the German Ifo Business Climate will be released at 4:00 am EDT. Confidence from German manufacturers, builders, wholesalers and retailers participate in the survey that has been improving slowly since September 2016. Consumer confidence in the U.S. will be released on Tuesday, March 28. The disconnect from strong consumer confidence and softer retail sales is expected to continue with the release of the Conference Board data. The Final GDP will be released on Thursday, March 30 at 8:30 am EDT. The third release on the fourth quarter gross domestic product for the United States.