• Healthcare, take II
  • Sky high
  • Hedge funds go long on MXN
  • RBA caution pressures Aussie dollar

Healthcare reform is back on the table, but failed to inflate the USD. VP Mike Pence met with the House Freedom Caucus to discuss a plan to repeal and replace Obamacare while House Speaker Paul Ryan was also on the wires, saying that the talks are “ongoing” and “productive,” but emphasized that they are in the “conceptual stage” and not ready to take it to a vote. Overall we’re not seeing much impact on currency markets, but should their efforts come to fruition, it could be a USD-positive and inflate investor expectations that President Trump will be able to push new legislation through.

US factory orders continue to expand for a third straight month in February, carrying with it an upward revision for January. More than half the gains came from expansion in the transportation sector, with civilian aircraft orders up 47.5%, while business spending plans may temper these gains as capital goods outside of defence and aircraft declined 0.1%.

The Mexican peso continues to extend gains in a turnaround that has been nothing short of stunning. Bets against the peso hit record levels in October, where expectations for the Trump administration to ostracize Mexico sparked pessimism towards Mexico’s export-driven economy. Investors have taken a 180, putting MXN at the forefront to be the world’s best currency rally this year. Now hedge funds are moving in, taking long positions that bet on the peso’s outperformance that has pushed the peso up another percent today.

The yen continues to gain traction as risk averse investors favor safe haven trades after the terrorist attack in Russia. JPY hit more than four-month highs against the euro and remains underpinned against the greenback. Aussie dollar erased overnight gains from trade numbers that beat analyst expectations after the Reserve Bank of Australia kept its cash rate at record lows. While the move was no surprise to investors, the bank seemed less confident about the economic outlook which is driving the sell-off for AUD.

EURUSD: Euro continues to search for direction ahead of the French election debate this evening.

GBPUSD: Sterling on the back foot after another disappointing PMI figure showed weaker growth in the construction sector.

AUDUSD: Aussie dollar weakness stemming from the RBA’s caution towards the housing sector and inflation.

USDCAD: Canadian dollar takes another step lower despite higher oil prices as investors weigh the risks ahead of Friday’s report on employment change.

USDJPY: Yen continues to find haven support from risk averse sentiment after the terror attacks in St. Petersburg.