Dollar slide after Trump's planned health reforms implode

Ausiliatrice Cristiano
Luglio 18, 2017

Mitsubishi UFJ Financial Group8306.T declined 1.4 percent and Mizuho Financial Group8411.T fell 0.9 percent.

The Australian dollar traded at $0.7795, after having hit a two-year high of $0.7840 on Monday, supported by data showing robust economic growth in China. A hawkish ECB could hurt Tokyo stocks as it could keep the dollar weak and lift the yen, as well as widen the gap between the European and Japanese bond yields, making it more hard for the BOJ to keep rates low.

On the brighter side, Toshiba Corp6502.T jumped 19 percent to 275.8 yen after US hedge fund Greenlight Capital on Friday said it had added a stake.

The 225-issue Nikkei Stock Average lost 118.95 points, or 0.59 percent, from Friday to close the day at 19,999.91, dropping below the 20,000 line and marking the index's lowest close since July 7. The implosion leaves the divided GOP with its flagship legislative priority in tatters.

South Korea's Kospi was up 0.29% as the benchmark index edged away from the 2,430 level.

THE QUOTE: "The U.S. health care bill is back in the limelight", Stephen Innes of OANDA said in a commentary.

Elsewhere in Europe, stocks struggled with European shares off 0.4 percent as a set of disappointing results from the likes of Ericsson and Lufthansa soured the mood. "This headline has massive implications to amend Obamacare and brings a huge element of doubt over the tax reform".

In four weeks dominated by expectations that by doubts over the Federal Reserve's ability to raise interest rates further, and signs that other major central banks are finally turning more hawkish, the dollar is now down more than 3 percent. Given weak recent inflation trends, both central banks appear wary of major policy tightening moves. It lost 52 cents, or 1.1 percent, to $46.02 a barrel in NY.

Crude oil futures edged higher, with USA crude CLc1 rising 0.2 percent to $46.10 per barrel and Brent crude LCOc1 adding 0.1 percent to $48.49.

Yields across the globe rose sharply after Trump won the USA election in November on promises for tax reforms and infrastructure investment that were expected to boost growth and inflation in the world's largest economy.

Against the yen, the greenback was firmer at 112.62 after sinking last Friday. The euro rose to $1.1516 from $1.1460.

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