|

Obamacare repeal bill: Defeat or Delay? - Swissquote

Peter Rosenstreich, head of market strategy at Swissquote Bank says judging from the thin, directionless flows in Asia, investors will have to wait for the outcome of today’s vote on the Obamacare repeal bill for the market's next move.

Key Quotes

"So far, the market has hyped this event as being a test of US President Trump's policy agenda, suggesting that a defeated healthcare bill would translate into barriers for the much-awaited tax reform policy and broader pro-growth agenda. As suggested in yesterday's report, we concur that short-term volatility will be driven by the result of this afternoon’s vote. With the Republican opposition needing less than 22 members to vote against the measure (reports suggest that 24 members are prepared to obstruct), we believe that the bill will be rejected (if the bill reaches the floor and is not delayed)."

"Interestingly, Republican conservatives are already shifting the blame away from President Trump to Speaker of the House, Paul Ryan. However, regardless of the outcome, Fed monetary policy will provide investors with a clear directional view. The weaker dollar has created looser conditions, while political uncertainty has forced investors to fade expectations due to the steeper Fed policy path (June hike is now 50/50). Amid falls in real yields and signs that the Fed will be willing to tolerate higher inflation to ensure growth is stable, risky asset should continue to outperform. Today, Fed Chair Yellen will provide additional insight into monetary policy strategy. We expect that she will reaffirm the central bank’s slow and steady approach to tightening, decelerating the economy without spooking financial conditions. Given this outlook, we maintain our stance that further risk accumulations will favour EM currencies (ZAR, ILS, PLN and INR long continue to build)."

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

More from Eren Sengezer
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD trims gains, nears 1.1700

The EUR/USD pair eases in the American afternoon and approaches the 1.1700 mark. The pair surged earlier in the day after the ECB left interest rates unchanged and upwardly revised inflation and growth figures. The US CPI rose 2.7% YoY in November, nearing Fed’s goal.

GBP/USD returns to 1.3370 after BoE, US CPI

The GBP/USD pair jumped towards the 1.3440 early in the day, following the BoE decision to cut rates, and US CPI data, which was much softer than anticipated. The US Dollar, however, managed to regain the ground lost during US trading hours.

Gold edges lower despite Fed rate cut hopes on cooling US inflation

Gold price declines to below $4,350 during the early Asian trading hours on Friday. The precious metal edges lower due to some profit-taking and weak long liquidation from shorter-term futures traders. 

Bitcoin, Ethereum, XRP face sharp volatility as US posts lowest inflation rate in years

The latest inflation report released on Thursday in the United States sparked a wave of volatility in the crypto markets. The US Consumer Price Index rose 2.7% YoY in November, below forecasts of 3.1%, and lower than September's 3.0% reading, according to the Bureau of Labour Statistics.

Bank of England cuts rates in heavily divided decision

The Bank of England has cut rates to 3.75%, but the decision was more hawkish than expected, leaving market rates higher and sterling slightly stronger. It's a close call whether the Bank cuts again in February or March.

Ripple holds $1.82 support as low retail demand weighs on the token

Ripple (XRP) is trading between a key support at $1.82 and resistance at $2.00 at the time of writing on Thursday, reflecting the lethargic sentiment in the broader cryptocurrency market.