US Dollar Eyes Make-or-Break Vote in Congress this Evening

The US dollar has found some momentary support over recent hours on hopes that the House of Representatives passes the healthcare repeal bill later today.

Reports confirm it could be a close vote.

The vote is seen as a test of the Trump administration’s ability to enact its policy agenda, including fiscal stimulus which has fuelled global stocks and the US Dollar higher over recent months.  

Republicans delayed the vote in the House of Representatives, set for Thursday evening, on the bill at the last minute.

It had become apparent that too many republican representatives would vote against the draft.

As a result, President Trump will now seek a vote for Friday with the message that unless the bill is passed, Obamacare stays.

“In doing so, he puts all the stakes on one card and presents his own representatives with an ultimatum: If no majority for the bill was found, he would shelve the project and the present system would be preserved,” says Financial analyst Jörg Angele at RBI in Vienna.

Angele adds:

“If the vote is lost, this would be a disaster for him and the Republican Party. In spite of a majority in both Houses of Congress, Republicans would then appear incapable of ruling.”

The stakes for the US Dollar and global risk appetite are high.

As we note here the inability of Trump to push through his agenda through Congress could well trigger a deep correction in global stock markets.

The Dollar too is liable to correct lower.

“Markets have come under significant selling pressure as investors are beginning to doubt the potential pace of US economic fiscal policy reform,” says Hans Redeker at Morgan Stanley.

The outcome of the vote on the Obamacare repeal bill is seen by some commentators as an important data point allowing markets to make a judgement on the ability of the US government to deliver on other reform projects, particularly on taxes and banking sector reform.

“Should the bill be rejected, the current high valuations in equity markets, particularly on US cyclicals and financials, may be at risk,” says Redeker.