Morning Market Updates – HealthCare Bill Disaster Sends USDX to Record Low

European and US Markets

The Federal Reserve Bank of Dallas President Robert Kaplan stated that no risk is expected out of the stock market valuations. The Federal Bank might device its own approach for the balance sheet in order to suit every type of security.

The balance sheet would be done in such a way that it shortens both MBS and Treasuries. Kaplan stressed that the GDP rate for the United States will be 2.25 percent. Also, he said that there should be a positive attitude among businesses in order to provide an increasing growth forecast.

Trump wants to do tax and infrastructure reforms simultaneously. Although the infrastructure changes were planned for the next year, Trump’s administration decided to work on it along with the tax reforms because of last week’s healthcare bill disaster. We expect the infrastructure reforms to gain attention and support of the Democrats.

With the recent health care bill debacle, President Trump’s administration caused a key U.S. dollar index to fall down to its lowest level after four months.  The ICE Dollar Index, which is the most traded currency index, dropped down by 0.8% reaching record lows of 98.86. The index was last seen with a value of 99.18.

“This is the market reacting to Donald Trump’s failure to implement one of his major campaign promises,” said Bart Wakabayashi, Tokyo branch manager for State Street. Now, investors are worried as to how Trump will effectively manifest his policies going forward. This will have a huge impact on the country’s GDP and inflation rates.

Moving on, we have the S&P/Case-Shiller Home Price Indices released by the Standard & Poor’s which are looking better for the day. This should assist the weak dollar and pave the road for its recovery.  We have an important speech to be heard from Federal Reserve Chairwoman Janet Yellen followed by the FOMC Member Kaplan’s Speech for the US data.
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