• Light US session in terms of economic data with CB consumer confidence the only scheduled release of note 
  • However, this does not mean the markets will necessarily be quiet as two political developments could cause moves
  • Senators are poised to vote today on health care and sanctions on Russia

There’s been a growing a growing scrutiny on political events in the US once more amongst market participants of late with this morning an inflammatory tweet from Donald Trump hitting the news wires. The US president labelled Attorney General Jeff Sessions as “very weak” when referring to his position on investigating Hillary Clinton’s emails and there is an increasing possibility that Sessions’ days in the role are numbered. The latest Twitter attack comes amidst reports the president is consulting advisers about possibly firing the country’s top prosecutor. Any further news on this could well prove to be market moving.   

This afternoon there are votes in the Senate on healthcare and Russian sanctions which could too prove important for the markets. The failure to repeal and replace “Obamacare” has been seen by many as a disappointment and has led many to question the ability of the administration to push forward with their tax overhaul and infrastructure spending programme – two of the main fundamental reasons that stocks rallied following Trump’s victory. Today’s vote is on the motion to proceed to debate and amendments on the House-passed health care bill and majority leader Mitch Mcconnell needs 50 of the 52 Senate Republicans to support him to pass it. 

The other main event to look out for on Capitol Hill is a vote on a bill that would slap new sanction on Russia, Iran and North Korea. The US House of Representatives is expected to vote overwhelmingly in favour of the bill that could potentially complicate President Trump’s hopes of pursuing improved relations with Moscow. The bipartisan measure aims to punish Russia for its 2014 annexation of Crimea from Ukraine and for alleged interference in the 2016 US presidential election. 

In terms of markets that could be impacted by these the US dollar has come under more pressure today with the EURUSD popping above the 1.17 handle to trade at its highest level since the summer of 2015. The market is building on last week’s gains and is now attempting to rise further after breaking out of the range seen for much of the past two years last week. 

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 The EURUSD has traded to its highest level today in almost two years. Will further political turmoil in the US see further gains in this cross.

Looking forward, also bare in mind that it’s the Fed rate decision tomorrow evening at 7pm (preview here) and, despite their being low expectations for a change in the Federal Funds Rate, this has the potential to be a major mover for the US dollar.