US Dollar Gives up Early Gains on Disappointing Data, Healthcare Vote Withdrawn

The US dollar declined against most of its main counterparts on Friday, even after the greenback rose earlier in the session to its strongest level in 3 days. The decline followed the withdrawal of the highly anticipated Republican healthcare bill from the House of Representatives before a vote that would have decided its future.

After two days of debating the American Health Care Act in the House of Representatives, House Speaker Paul Ryan announced that President Donald Trump agreed to withdraw the bill. The decision came after it became clear the bill would not garner enough votes to pass, as the number of Republicans that would have voted yes was less than 215, the minimum number of required votes.

Some of the Republicans who would have rejected the bill felt that it would have taken away too much of the health coverage offered by Obamacare, while others demanded that the bill would have introduced more changes. The final result is a major political loss to Trump, as dismantling Obamacare was one of the main promises made during his presidential election campaign.

Following the withdrawal of the bill, investors became concerned that the president may face more hurdles when attempting to execute his economic agenda. Trump had promised to increase infrastructure spending and cut corporate taxes to improve business environment and support growth.

Economic data releases further weigh down the US dollar today. Orders of core durable goods rose 0.4% in February, according to the US Census Bureau, which disappointed expectations of a 0.5% gain. A report by IHS Markit added to today’s negative releases after showing that the services purchasing managers’ index declined to 53.4 in March from 54.2 in February. Markit’s manufacturing purchasing managers’ index also declined to 52.9 in the current month, from 53.8 in the previous month.

EUR/USD traded at 1.0797 as of 20:55 GMT on Friday, from 1.0815 at 19:25 GMT, the pair’s highest level since March 22. EUR/USD started the day at 1.0781.

The Dollar Index, which tracks the performance of the US currency against its major peers, was at 99.62 as of 21:00 GMT today, from 99.76 yesterday.

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