Investor sentiment is pessimistic this morning. It is all about the US health care bill and investors have their full focus on this. The Republican health bill has failed to see the day light and this signifies nothing but a catastrophe for Trump administration. The profound influence of this disappointment is in the dollar index which plunged to its August lows and the yield on treasuries nudged lower as more senators announced their opposition. Investors are already very dubious in relation to what Trump can deliver or even if he could survive his full term. The fiasco of the health care bill means that the tax reforms or the so called infrastructure spending plan are in jeopardy.
Dollar Weakness Made Aussie Shine
In the currency market, a number of currencies have rallied against the dollar on the back of this development. The Aussie, yen and the euro rallied overnight and there is still enough momentum there. The Aussie shined the most among other as the central bank confirmed their confidence in the economy. However, they did mention their concern about the outlook for housing and job industry is still not sturdy.
Carney and CPI Could Make or Break Sterling
As for the British pound, it is the CPI data which would make or break the deal. The forecast is that the prices are probably steady and stayed at 2.9%. But here is an essential bit, even if it stayed as it is, the wage growth is not sufficient to keep up with this. At the same time, you cannot neglect the very fact that the pace of CPI, RPI and PPI has slowed somewhat.
Mark Carney, the governor of the Bank of England will be speaking later today and traders are going to watch his comments very closely to see any clues in relation to upcoming change in the bank's policy. We do not expect him to comment anything meaningful on the monetary policy yet, but it would be arduous to steer clear of this given the hawkish stance of the some MPC members. Therefore, there could be one or two comments buried on this topic.
Gold To Break The $1250
The precious metal, gold is under demand as the risk off mode is in full swing. After suffering some heavy losses mid last week, the rally in the gold price is not losing steam at all. It is highly likely that we could break the resistance of $1250 and target the level of $1300.