US healthcare bill vote breathes life into dollar
sydney — The dollar recouped a little lost ground on Friday amid signs a delayed vote on President Donald Trump’s healthcare bill would go ahead later in the day, though it remained unclear whether it would pass.
Investors regard the vote as test for the Trump presidency that could show whether it can muster the backing needed to push through fiscal measures central to its economic agenda.
European bourses were seen opening a shade firmer while S&P 500 futures added 0.25 per cent as investors dipped a toe back into risk trades after a week of wild mood swings.
Australia bounced back from a tough few days to be up 0.8 per cent, while MSCI’s broadest index of Asia-Pacific shares outside Japan was all but flat.
Japan’s Nikkei added 0.8 per cent, encouraged by a slight softening in the yen. A poll out on Friday also showed confidence among Japanese manufacturers rose for a seventh straight month to a three-year high.
Trump will get a second chance to try to close the deal with Republican lawmakers on dismantling Obamacare in a high-stakes vote on a new healthcare bill later in the day. Some in the markets suspect a failure to pass the bill could endanger Trump’s promises of tax cuts and stimulus so beloved by Wall Street and US corporates.
Adding to the unease was a report that the Trump administration is preparing new executive orders to re-examine all 14 US free trade agreements, including those in Asia, to aid American firms.
After falling sharply mid-week, Wall Street had lapsed into waiting mode on Thursday with the Dow down 0.02 per cent. The S&P 500 lost 0.11 per cent and the Nasdaq 0.07 per cent.
As stocks have stalled, bonds rallied. Two-year Treasury yields have fallen 14 basis points in the past week or so to stand at 1.27 per cent. At the same time, German yields have risen on speculation the European Central Bank might begin the long process of rate normalisation this year. The central bank issued an upbeat outlook on the eurozone economy overnight.
The net result was a contraction in the dollar’s yield advantage over the euro, which has seen the single currency steady at $1.0767 after scoring a six-week top of $1.0828 earlier this week. The dollar did gain 0.3 per cent on the yen to 111.31, having hit a four-month low of 110.62 the day before. Against a basket of currencies, it was up 0.2 per cent at 99.962 having shed 1.3 per cent in the past two weeks.
“The dollar is likely to struggle as global investors gradually realise that the US can still produce policy gridlock even with one party holding the White House, Senate and House,” said Sean Callow, a senior currency analyst at Westpac. —