Article / 24 March 2017 at 8:00 GMT

Morning Markets: Dollar perks up as Trump gambles

Former managing editor, TradingFloor.com / Saxo Bank
Denmark

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Watchlist

  • Eurozone: March Purchasing Manager Index            (0900 GMT)
  • US: Chicago Fed President Charles Evans speaks    (1200 GMT)
  • US February Durable Goods Orders                          (1230 GMT)
  • US: St. Louis Fed President James Bullard speaks    (1305 GMT)
  • US: New York Fed President William Dudley speaks  (1400 GMT)

US president Donald Trump has taken perhaps his biggest gamble (he's taken a few, to be fair) since entering The White House by warning Republicans that they will be stuck with Obamacare if he fails to secure the passage of his controversial healthcare bill.

The vote had been expected to take place overnight but will now be delayed until this evening as feverish negotiations continue in the US capital. If Trump fails to get the bill through, then this could spell the end, at least for now, of the Trumpflation trade that had been keeping markets buoyed at very elevated levels since November 8.

There are all sorts of ways the market might have been expected to react to this, but a sense that Trump might get the result he desires has helped dollar claw back some of its losses this week during the Asian session. EURUSD was significantly south of the 1.08 handle in the hour going into the European open, USDJPY briefly threatened 111.50 and USDCNH spiked some 100 pips through the Asia session.

Has the market got this right? We'll know in a few hours but a fear that this might be shoving rather a lot of eggs in one basket cannot be dismissed. Gold's slight slip, the weaker yen, a stronger Nikkei and US 10-year Treasuries yields edging higher to 2.43% hint at a slightly more bullish tone but the underlying caution in the market remains.

A relative recovery in oil prices also helped confidence in Asia but with a raft of key data ahead headlined by European PMIs and with the drama playing out in Washington this could be a turbulent day on the markets.

This won't of course be the first time that we've said that since January 20.

Market signals

Asian session

  • Brent crude was up 0.34% to $50.73/b, and WTI added 0.42% to $47.90/b at 0552 GMT
  • The firmer crude prices buoyed sentiment in Asian markets
  • Japan's Nikkei 225 clawed back losses made earlier this week, helped by the weaker yen
  • The Nikkei 225 closed up by a robust 0.92% at 19,262.53
  • Japan's flash Manufacturing PMI slipped to a three-month low of 52.6 in March

  • Toshiba shares soared after a hedge fund said it was the company's top shareholder

  • Shares in the troubled Japanese electronics giant closed up 7.57% at ¥223

  • The Shanghai Composite was up 0.33% to 3,259.36 at 0609 GMT

  • Hong Kong's Hang Seng edged lower; it was down 0.15% to 24,291.26 at 0505 GMT

  • Samsung apologised to its shareholders over scandals, promised to improve governance

  • Korea's Kospi Composite lost ground; it was down 0.23% to 2,167.67 at 0447 GMT

  • Australia's S&P/ASX200 closed up 0.83% at 5,755.40, but ended lower for the week

  • NZ's trade deficit to the year ended February was $NZ3.8bn, the largest in eight years

  • The vote for a new US healthcare bill has been rescheduled for Friday

Forex ahead

  • USDJPY fell on the news that the healthcare vote was to be moved to Friday
  • The US dollar was worth ¥111.4750 at 0601 GMT
  • The dollar index was at 99.967 at 0503 GMT
  • AUDUSD gained a little ground; it was worth 0.7620 at 0601 GMT

From the Floor

Foot down. "Trump is demanding a do-or-die vote today and if it is seen as him being decisive, that could be risk to the upside for dollar," says Hardy

Overvalued equities. "If we get a setback in global equities, then we could see a big crowd at the exit," says Garnry.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

1..2..3
Europe's flash March Composite PMI is today's most important data release, and after a big rise in February, a small decline is expected, writes Juhani Huopainen.

Waiting game
The Reserve Bank of New Zealand as expected kept its powder dry on rates on Wednesday, and it is unlikely to be tempted into a move before 2018, says Christoffer Moltke-Leth.

On the horizon
The first round of the French election is now firmly in the front view, writes Dan Juhl Larsen, and that has perked interest in one-month euro options.

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 The vote will be all about this, and the implications for
the Trump trade are far-reaching: Photo: Shutterstock

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