U.S. Dollar Pressured by Worries Over Health Care Legislation

The Trump Administration was dealt a potential setback last week after a vote in Washington on the repealing of Obamacare and new healthcare legislation was put on hold. Lack of support for the bill from a handful of Republicans and every Democratic Party representative forced House Speaker Paul Ryan to pull the bill before a vote could take place.

Some investors viewed this bill as a litmus test of whether U.S. President Donald Trump will be able to pass fiscal stimulus. This may mean unexpected delays in tax reform, fiscal spending and deregulation.

June U.S. Dollar Index futures were under pressure all week as investors adjusted positions ahead of Thursday’s and Friday’s health care vote. The index actually hit its low of the week at 99.355 just as Speaker Ryan was announcing the postponement of Friday’s vote. Immediately after the announcement, the dollar index rallied to 99.61 before settling at 99.442. For the week, the index was down 0.673 or -0.67%.

Investors also continued to react to the previous week’s Federal Reserve monetary policy statement which indicated the central bank would increase interest rates gradually in 2017 and stick with its original forecast from December 2016 for at least three rate hikes this year and three in 2018. The dollar retreated because some investors were pricing in the possibility of four rate hikes.

In other news last week, Weekly Unemployment Claims rose to 261K, well above the 240K estimate. Core Durable Goods Orders came in 0.4% higher, slightly below the 0.5% estimate. The previous month’s report was revised to 0.00%, up from -0.2%.

AUD/USD

Last week, the Reserve Bank of Australia released its latest monetary policy minutes. The RBA minutes revealed a more positive outlook on growth, but one that contrasted with deepening housing risk.

“Recent data continued to suggest that there had been a build-up of risks associated with the housing market. In some markets, conditions had been strong and prices were rising briskly, although in other markets prices were declining,” the official transcript of the March 7 RBA meeting revealed.

The AUD/USD finished the week at .7622, down 0.0080 or -1.04%.

NZD/USD

Last week, the Reserve Bank of New Zealand left its benchmark interest rate unchanged at 1.75 percent, noting economic growth was weaker than expected at the end of 2016.

In its monetary policy statement, the central bank said there has been an improvement in global growth over the past two months but “major challenges remain with on-going surplus capacity in the global economy and extensive geo-political uncertainty.”

The NZD/USD ended the week at .7027, up 0.0011 or 0.16%.