The dollar slid to a four-month low against a basket of currencies on Monday as investors weighed the prospects of a U.S. fiscal spending boost under President Donald Trump after his failure to push through a key healthcare reform bill.
Is the Trump honeymoon over? That is the question being asked today after the breaking news late last week and what has dominated attention over the weekend with this being that President Trump was defeated in his quest at replacing Obamacare. The result of the Trump healthcare bill was not in line with market expectations, but more importantly it has made the markets begin to get nervous about what other possible hurdles Trump could potentially face when it comes to implementing other aspects of his campaign agenda.
It is not the failed healthcare bill itself that has caused all these market moves. Yes that may well have been the trigger, but investors are worried about the challenges Trump will face in trying to get his other policies passed which may well limit the government’s fiscal spending. The worry is that only will this weigh on GDP, but potentially on inflation too. Thus, the Fed may not raise interest rates as aggressively as had been priced in, hence the falls in the dollar.
Britain-based banks should take steps to ensure they do not have to curb lending suddenly if the country leaves the European Union in a disorderly way, the Bank of England said on Monday as Prime Minister Theresa May prepares to start Brexit talks.
The euro/U.S. dollar 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.
The euro/U.S. dollar (EUR/USD) currency pair looks set to close higher for the fourth consecutive week. That sounds impressive. But to put things into perspective, it has been trading inside a narrow range between 1.05 and 1.08 for much of this year. The 300 or so pip range is nothing to get excited over. But then this is the EUR/USD we are talking about. It hasn’t exactly moved much since early 2015. Nevertheless, there’s no doubt about which group of market participants have been in control this month, and, in fact, quarter.
The nine-month Brexit "phony war" is set to come to an end next week when British Prime Minister Theresa May notifies the European Union of Britain's intention to leave, starting two years of unprecedented negotiations.
The renewed protectionism concerns and Trump jitters have triggered risk aversion this week consequently attracting investors to safe-haven assets. In times of unease, gold remains a trader’s best friend and such was displayed on Thursday when the metal punched above $1,253 per ounce.
With strong Eurozone data and ahead of Canadian CPI, we are naturally drawn to the EUR/CAD today. Well, the EUR/CAD has been trending higher since the end of February after it created a false break reversal pattern around the 1.38 handle. It tried to break below that support level several times, but failed.