Dollar Drops to Fresh Low on Uncertainty About Health-Care Vote

Updated on
  • Vote expected later today, just as FX liquidity evaporates
  • Bloomberg dollar index remains close to key technical support

The dollar fell versus a majority of its G-10 peers and dropped to its session low as markets awaited a vote on a health-care reform plan amid indications that House Republicans have not yet secured enough support to pass the bill.

The greenback relinquished gains versus most of its G-10 peers while also losing ground against a majority of emerging market currencies, pushing the Bloomberg dollar index down about 0.2 percent toward key technical support. The euro climbed above 1.0800 after the region’s Purchasing Managers Indexes unexpectedly rose while the Mexican peso and the Brazilian real advanced strongly. The health-care bill is seen as an early gauge of President Trump’s ability to work with Congress on his legislative agenda, including fiscal reform.

  • The dollar is on track to post its second weekly loss in a row, with the Bloomberg index at its lowest since Nov. 10.
  • Amid muted trading flows, EUR/USD orbited 1.0800 for most of the morning before rising to a fresh high for the day after a report suggested the health-care vote may be delayed; USD/JPY fell to a new low on that report, though losses were pared as White House press secretary Sean Spicer subsequently contradicted the first report. The yield on the 10-year Treasury is trading near 2.40% and just above its session low.
  • A vote on the health-care bill may come before the end of the day. Since the final hours of the trading week can be marked by low liquidity as players try to avoid getting stuck with positions over the weekend, price action may turn choppy at the session’s end or, if the vote is late, at the start of Asian trading next week.
  • EUR/USD is trading at 1.0805 vs session high 1.0815; the euro has been unable to gain much traction above 1.0800 this week as offers continue to line the path ahead of the 1.0829 2017 high.
  • Bids to buy EUR are positioned under 1.0760 and cushioned the pair overnight, said traders in Europe and London familiar with the transactions who asked not to be identified because they are not authorized to speak publicly.
  • USD/JPY dropped to a fresh low at 110.78 and remains close by; trading flows are muted and order books are thinning ahead of the Japan fiscal year-end a week from today; the USD is holding just above its 2017 low at 110.63 set Thursday.
  • Offers to sell USD are positioned at 111.60, traders said; bids are in place under 110.60 and extend all the way to 110.00 where demand interest strengthens.
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