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Why the House Health Care Vote Matters

The current version of Trump’s healthcare plan will be dead-on-arrival in the Senate yet Thursday’s vote in the House is a blockbuster. We explain why. The yen was the top performer on Wednesday while the Australian dollar lagged. A new Premium trade has been issued ahead of the House vote, backed by 4 technical reasons and 4 charts. 5 out of the 7 existing Premium trades are currently in the green.

The risk aversion in markets stopped on Wednesday but a more-accurate description was that it was on pause. The market is trying to figure out if the House vote on Thursday on the bill to replace Obamacare will pass or fail.

The bill itself isn’t so much what’s at stake. The market is increasingly viewing it as a test of Republican leadership. It’s a barometer on whether Paul Ryan and Donald Trump can whip the House into supporting its agenda.

So what’s at stake isn’t necessarily this bill. It’s the tough fights on tax reform, infrastructure and regulation that are ahead. The mantra of ‘repeal and replace’ Obamacare was the one thing seemingly every Republican agreed upon but exactly how that would work is proving to be a problem.

A risk we see here is that the market is overstating the problem. This isn’t a Republican vote on Trump, his leadership or team unity. It’s a vote on a specific piece of legislation and some Congressmen want it changed.

In that sense, buying something like USD/JPY or equities could have limited downside risks. If it passes, it’s all upside. If the vote fails or is postponed, there will be selling but Republicans will quickly regroup and move forward. Markets will recognize that sooner than some think.

Changing gears to central banking, the RBNZ held rates at 1.75%, as expected. The anti-NZD jawboning continued and the message was largely unchanged. One small shift was language saying inflation will return to target in the medium-term, rather than ‘gradually’. NZD initially dipped but is back to pre-RBNZ levels.

The rest of the Asia-Pacific calendar is light but it will pick up later with UK retail sales and Yellen on the agenda.

Ashraf Laidi
Ashraf Laidihttp://ashraflaidi.com/
Ashraf Laidi is an independent strategist and trader, founder of Intermarket Strategy Ltd and author of "Currency Trading & Intermarket Analysis". He is the former chief global strategist at City Index / FX Solutions, where he focused on foreign exchange and global macro developments pertaining to central bank policies, sovereign debt and intermarket dynamics. Ashraf had also served as Chief Strategist at CMC Markets, where he headed a global team of analysts and led seminars and trainings in four continents. His insights on currencies and commodities won him several #1 rankings with FXWeek and Reuters. Prior to CMC Markets, Laidi monitored the performance of a multi-FX portfolio at the United Nations, assessed sovereign and project investment risk with Hagler Bailly and the World Bank, and analyzed emerging market bonds at Reuters. Laidi also created the first 24-hour currency web site for traders and researchers alike on the eve of the creation of the euro. Laidi's analysis of currency markets stand out based on his distinct style in bridging the fundamental and technical aspects of the markets. Laidi regularly appears on CNBC TV (US, Europe, Arabia and Asia/Pacific), Bloomberg TV (US, Asia/Pacific, France and Spain), BNN, PBSs Nightly Business Report, and BBC. His insights also appear in the Financial Times, the Wall Street Journal and Barrons. He has given numerous interviews and lectures in Arabic, French, and to audiences spanning from Canada, Central America and Asia/Pacific.

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