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Dean's Daily FX Update – 18 July 2017
Noteworthy News
- The circus in Washington reared its ugly ahead again last night, new that the Republicans will not get a deal on healthcare through has rocked the markets. The New York open will be important to watch this morning.
Recap
It started off as a quiet Monday and the dollar was able to make some inroads against all the major pairs, but all the hard work unravelled last night on news that the proposed new Healthcare Bill is essentially dead in the water after prominent Republicans stated they would not vote it in.
This is “Made in America” week in Washington and this was certainly not the right way to start the week, the market wants to see tax cuts and repatriation, the market wants to see relaxed regulation and infrastructure spend. By voting the Republicans in to the Presidency, the House and Senate – the people were saying that they wanted change, and the market wants to see change.
I am not certain how to read this latest development and I would prefer to see what materializes in the New York session, President Trump commented a couple months ago that he would release the tax reform after the repeal of Obamacare, does that mean that nothing will be done if healthcare is not passed? Either way, you get the impression that the Republicans may have pushed the self-destruct button, there are Senate seats up for grabs next year and if the Republicans can’t put their differences aside and lead the country – you get the impression that the people will vote the Democrats in.
The market is clearly confused now and after the initial move against the dollar, it has all gone quite now, the technical levels have all been thrown into jeopardy as the breaks are not exactly of any trading cause. My take is that this is not the end of the world and it will force the Republicans to start working as a unit, these sort of things tend to blow over – remember the testimony of Comey? Exactly! The problem is that this Administration faces a lot of scrutiny and it does not deal with it well.
I suspect that the market may shift towards the BOE Governor this evening and then of course on Thursday we have both Japan and Europe announcing their interest rate decision. Both events will be market moving, for now it seems every time the dollar takes one step forward, it takes two steps backward – and they said that African politics was a circus.
For now it may be about letting the storm pass, we have covered a nice fundamental strategy to use when we have these fundamental moves. Hopefully we are able to get back to the normal programme tomorrow.
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