"It appears (Trump's) lack of skilled political operators will hurt the enactment of his key initiatives," said Stephen Innes, senior trader at OANDA.
The Australian dollar slipped to one-week lows on Wednesday as investors sold riskier assets and rushed towards safe havens, such as gold and government bonds, on concerns about U.S. President Donald Trump’s economic growth agenda. Investors became jittery overnight on worries about how quickly Trump could implement pro-growth policies, and unwound bullish bets on the U.S. dollar. That hit risk sentiment globally, hurting stocks, commodities and currencies. The Australian dollar hit a trough of $0.7651 after reaching $0.7750 in the previous session, the highest since early November. The Aussie has flirted with $0.7700/50 level several times in the past month but failed to pierce beyond, making it an indomitable barrier.
“It appears (Trump’s) lack of skilled political operators will hurt the enactment of his key initiatives,” said Stephen Innes, senior trader at OANDA. “The markets are very fidgety about this political setback for the Trump administration, which will be the primary driver in today’s session and possibly beyond. The Aussie dollar’s resilience will certainly be tested as the Trump re-inflationary narrative comes under scrutiny.” Trump is trying to win the first major legislative battle of his presidency in a crucial House of Representatives vote this week over his healthcare reforms. The Aussie nursed losses on safe haven currencies, such as the yen, the euro and the pound. It hit a 1-1/2 month trough on the yen and a one-month low on the pound.
Across the Tasman Sea, the New Zealand dollar came off a three-week high of $0.7090 to fall to as low as $0.7016. It last traded at $0.7039. The drop came in spite of strong results at an auction for dairy, the country’s largest good’s export earner, which sparked a brief rally in the kiwi in the early hours of the morning. The market was now turning its attention to the Reserve Bank of New Zealand’s rates decision on Thursday, in which the central bank was widely expected to keep rates on hold. Investors will closely watch for any comment on the outlook for rates this year. New Zealand government bonds gained, sending yields 1.5 basis points lower along most of the curve. Australian government bond futures rose too, with the three-year bond contract up two ticks at 97.98. The 10-year contract climbed five ticks to 97.20.