Dollar Falls as Health-Care Vote Delay Adds to Doubts on Reforms

  • Loonie gains after Poloz says rate cuts have done their job
  • Aussie rises with exporters leading corporate buying: trader

McConnell Delays Health Care Bill in Search of GOP Votes

The dollar dropped against all of its Group-of-10 peers as voting on the U.S. health-care bill was delayed, reinforcing doubts about the government’s ability to enact policy changes.

The greenback slipped as the Senate Republican leadership decided to push back a vote on the bill until after the July 4 recess. The dollar also came under pressure as European Central Bank President Mario Draghi’s positive assessment on the inflation outlook sent the euro to a 10-month high, while comments from Federal Reserve Chair Janet Yellen provided scant support.

“ECB is no longer moving in a completely opposite direction to the Fed and that could be resulting in broader U.S. dollar weakness,” said Janu Chan, a senior economist at St. George Bank in Sydney. “The delay to the vote on the health-care bill highlights the difficulty in passing policies and raises doubts on whether President Trump can pass his stimulus and tax cut policies.”

The International Monetary Fund removed assumptions of President Donald Trump’s plans to cut taxes and boost infrastructure spending from its outlook for the U.S. economy. The fund trimmed its U.S. growth forecast for the year to 2.1 percent, from 2.3 percent.

  • USD/JPY weakens 0.3% to 112.07, the first decline in three days; trades in 112.03-112.35 range
    • A number of USD/JPY FX options expire Wednesday between 111 and 112.25, including $1.76b strike at 111.60: DTCC
  • AUD/USD gains 0.3% to 0.7609
    • Exporters are leading corporate buying of AUD/USD given improving commodity prices, which has taken spot toward the overnight high, says an Asia-based FX trader who asked not to be identified as he isn’t authorized to speak publicly
    • Option-related selling seen in front of A$524m of 0.7635 calls expiring June 29 and adjacent to the 0.7636 June high
  • USD/CAD falls 0.4% to 1.3146, a third day of declines
    • Comments from Bank of Canada governor Stephen Poloz have continued to attract fund-related selling, says an FX trader
    • “It does look as though those cuts have done their job. We’re just approaching a new interest rate decision, so I don’t want to prejudge that, but certainly we need to be at least considering that whole situation now that capacity -- excess capacity -- is being used up steadily,” Poloz says in CNBC interview

— With assistance by Michael G Wilson, and Chikafumi Hodo

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