Dollar on the back foot

The dollar is on the back foot after Republicans abandoned a vote in Congress on the healthcare bill (due to lack of support for it), weakening to over $1.0850 against the euro and to Y110 against the Japanese yen. US bond yields have also fallen in overnight trading in Asia – by more than 5bps to circa 2.35% in the case of 10-year yields – and equity markets have opened weaker this morning

Donald Trumps says his administration will now ‘move on’ to tax reform. His Treasury Secretary says he hopes to have proposals ready by August, although he admits it might fall into autumn, but in any case markets have a bit to wait yet for details on any ‘fiscal stimulus

Sterling is steady against the euro (at around 86.5p), ahead of the triggering of Article 50 this week (Wednesday), though it has gained some ground against the generally softer dollar to trade at over $1.25

Fed member Lockhart  says the central bank is ‘pretty solidly optimistic about the (economic) outlook and so ‘it’s appropriate to continue removing policy accommodation’ (i.e. continue raising interest rates)

Data due this week include final estimates of Q4 GDP in the US and UK, and the ‘flash’ CPI for March in the Euro area