Trump fail­ure on health­care sends dol­lar to 10-month low

Kuwait Times - - BUSINESS -

The US dol­lar sank to a 10month low against a bas­ket of ma­jor cur­ren­cies yes­ter­day, as the col­lapse of Pres­i­dent Donald Trump's lat­est health­care bill eroded con­fi­dence in his abil­ity to leg­is­late to boost growth.

The Aus­tralian dol­lar was by far the big­gest ben­e­fi­ciary, jump­ing 1.8 per­cent to more than two-year highs af­ter min­utes from a Re­serve Bank pol­icy meet­ing showed it turn­ing more up­beat on the econ­omy. In four weeks dom­i­nated by doubts over the Fed­eral Re­serve's abil­ity to raise in­ter­est rates fur­ther, and signs that other ma­jor cen­tral banks are fi­nally turn­ing more hawk­ish, the dol­lar is now down more than 3 per­cent.

At 94.650 yes­ter­day, the dol­lar in­dex was down 8.8 per­cent from the 14-year peak of 103.82 hit on Jan. 3. The euro rose 0.7 per­cent to $1.1564, its strong­est since May last year. "Clearly any­thing that comes along at the mo­ment just cor­rob­o­rates the mar­ket's neg­a­tive at­ti­tude to the dol­lar," said Neil Mel­lor, se­nior FX strate­gist with Bank of New York Mel­lon in London.

"There's just not enough in­fla­tion at the mo­ment. And any­thing like this (de­feat for Trump) is li­able to push it lower." Two more Repub­li­can Sen­a­tors, Jerry Mo­ran and Mike Lee, an­nounced their op­po­si­tion late on Mon­day to a re­vised Repub­li­can health­care bill, leav­ing ef­forts to pass the leg­is­la­tion in chaos.

"If the bills won't pass, there will be no money for tax cuts. The im­ple­men­ta­tion of his fis­cal pol­icy will be dif­fi­cult," said Bart Wak­abayashi, Tokyo Branch Man­ager of State Street.

Fri­day's weak read­ing on US in­fla­tion and re­tail sales also fanned spec­u­la­tion the Fed may not have jus­ti­fi­ca­tion for an­other rate hike by the end of this year, de­spite pol­i­cy­mak­ers' pro­jec­tion for such a move. Money mar­ket in­stru­ments price in less than 50 per­cent chance of a rate in­crease for the rest of the year.

In con­trast, cen­tral bank pol­i­cy­mak­ers in the euro zone, Bri­tain and Canada have re­cently sig­naled they could ad­just their poli­cies, with the Bank of Canada rais­ing rates last week for the first time since 2010.

But the lat­est signs from New Zealand, Swe­den and the United King­dom all point in the op­po­site di­rec­tion. Bri­tish in­fla­tion sur­prised by fall­ing for the first time since Oc­to­ber, knock­ing a whole cent off the value of the pound against the dol­lar and weak­en­ing it 1 per­cent against the euro. —

A woman walks past an elec­tronic stock board show­ing Ja­pan's Nikkei 225 in­dex at a se­cu­ri­ties firm in Tokyo yes­ter­day. —AP

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