Dollar remains hobbled by Trump
The dollar’s travails extended into Wednesday as Donald Trump faces a battle to push through his much-vaunted economic agenda, but equity traders took the news in their stride.
The euro eased slightly on Wednesday against the dollar, having surged the previous day to a near 15-month pinnacle at $1.1583 — last seen in May 2016.
However, after a blistering rally in the months following Trump’s November election win — fuelled by bets his tax cuts and big spending plans would fan inflation — the greenback remains hobbled by a congressional logjam and a series of crises engulfing the White House.
A crucial blow was struck Monday when it was clear his Republican party would not be able to muster enough senators to pass controversial healthcare reforms, throwing into doubt his ability to pass big-ticket measures.
With inflation stuck below the Federal Reserve’s two percent target and prospects fading of any economic reforms, traders are questioning whether the Fed will raise interest rates for a third time this year. Just months ago there had been bets on four increases.
“The market has been waiting for the Trump failure cascade to begin and yesterday’s health care headlines once again bring into question the administration’s ability to enact on their key legislative promises, leaving investors in limbo and the dollar sagging,” analyst Stephen Innes at trading firm Oanda.
The greenback was only marginally up against its major peers but remained stuck near multi-month lows, with the euro enjoying some support from expectations the European Central Bank will soon begin to reduce stimulus.
The bank will hold its next policy meeting Thursday and boss Mario Draghi’s statement will be pored over for clues about its timetable as the eurozone economy continues to improve.
“As the ECB meeting gets closer… attention will increasingly focus on the likelihood of any further hawkish commentary from the central bank that could squeeze the euro even higher against the dollar,” noted IG analyst Chris Beauchamp.
Key figures around 1100 GMT
Euro/dollar: DOWN at $1.1528 from $1.1554 at 2100 GMT Monday
Pound/dollar: DOWN at $1.3027 from $1.3040
Dollar/yen: DOWN at 112.00 yen from 112.08
London – FTSE 100: UP 0.1 percent at 7,393.90 points
Frankfurt – DAX 30: FLAT at 12,434
Paris – CAC 40: UP 0.2 percent at 5,181
EURO STOXX 50: UP 0.4 percent at 3,141.80
Tokyo – Nikkei 225: UP 0.1 percent at 20,020.86 (close)
Hong Kong – Hang Seng: UP 0.6 percent at 26,672.16 (close)
Shanghai – Composite: UP 1.4 percent at 3,230.98 (close)
New York – DOW: DOWN 0.3 percent at 21,574.73 (close)
Oil – Brent North Sea: UP 20 cents at $49.04 per barrel
Oil – West Texas Intermediate: UP 14 cents at $46.54
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