Advertisement
Advertisement

USD/JPY Fundamental Forecast – March 24, 2017

By:
James Hyerczyk
Published: Mar 24, 2017, 19:46 UTC

The Dollar/Yen is trading flat ahead of the vote to repeal Obamacare and replace it with the Republican Party plan called the American Health Care Act.

US Dollar Index

The Dollar/Yen is trading flat ahead of the vote to repeal Obamacare and replace it with the Republican Party plan called the American Health Care Act. Stocks have given back most of their earlier gains and the U.S. Dollar is trading lower against a basket of currencies as investors await the results of the vote that is expected to take place at 1930 GMT.

Investors are mixed about what will happen to stocks and the U.S. Dollar after the vote.

Going into the vote, here is what the GOP needs to pass the bill. The health care bill needs a simple majority, or 215 votes to be approved in the House. With no Democrats expected to support it, House Speaker Paul Ryan can afford to lose no more than 22 Republican votes.

USDJPY
Daily USDJPY

Earlier today, Speaker Paul Ryan rushed to the White House to tell Trump they don’t have enough votes.

Trump has already stated that if the bill doesn’t pass then American’s will have Obamacare for the next year and that he’ll move on to his plans for tax reform.

Bearish investors believe that a Trump loss will be a negative for the dollar and stocks because it will likely mean Trump will have a hard time getting any of his promises passed – namely increased fiscal spending, tax reform and relaxed regulations.

Bullish investors believe that moving on to tax reform will be a good thing for stocks.

Ultimately, I think the direction of the USD/JPY will be determined by the movement in Treasury yields. If Treasury yields fall further then this will weaken the spread between U.S. government bonds and Japanese government bonds. This will be bad for the U.S. Dollar. If the spread widens then this will favor the Greenback.

Stocks will trade emotionally so they probably won’t be a good indicator. I think the direction of the Treasury yields will tell us more about how the financial community feels about the whole situation and whether the USD/JPY will go up or down.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

Did you find this article useful?

Advertisement