President Trump felt his first rejection just over 60 days into his time as US presidency. His healthcare bill which he boasted would revolutionise US health insurance was abandoned as he was unable to agree the format within his party.
The outcome was seen by many as a damaging blow to his credibility as the intended reform had been a key target objective in order to abolish Obamacare. Following the announcement, the USD exchange rate slid against the majority of the major currencies.
Naturally many will look doubtfully over his ability to implement future changes which are expected to include a thorough Tax reform, Fiscal Stimulus and the mooted national infrastructure development.
The USD exchange rate had been incrementally declining following limited support for trump although the losses had been controlled. However, with the inability to get approval through a republican led congress the losses increased.
It is however believed that support will be received on bills that promote growth in the US therefore if changes are implemented in the coming weeks we could indeed see the USD exchange rate potentially reverse some of the losses.
Elsewhere there were a few speeches from Evans head of the FED in Chicago who stated that inflation was well on its way to reaching required levels to promote rate hike. Evans took the time to elaborate saying that he viewed 3 hikes as plausible and 2 to 4 hikes as possible. He also shared that he thought the rejected health bill did little promote stability. In all the discussion did little to support the dollar or give guidance on possible future hikes.
Kaplan Head of the reserve bank in Dallas provided slightly more direction saying that US interest rate hikes should be ‘Gradual and patient’. He continued to say that he would support rate hikes providing the jobs markets and inflation remained on point.
EUR-USD exchange rate rose from 1.0846 during the evening session rallying to briefly touch 1.0894. EUR-USD were corrected by Kaplan’s more upbeat tone, however, all eyes will be on future bill approval or rejection.
The GBP USD also was able to capitalise on Trump’s misfortune and the GBP USD exchange rate broke through the 1.25 mark regardless of the impending Article 50 triggering which will happen shortly.