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Trump’s ultimatum: win-win now, lose-lose later

Republican lawmakers are still  negotiating the AHCA bill, aka Trump-care. The legislation that is meant to repeal and replace Obamacare does not have enough support from the ruling Republicans to pass the vote in the House, a first step.

Given the opposition from within, President Donald Trump decided to set an ultimatum: a vote on Friday to  either confirm the deal or to move on other topics.

This has significantly helped the US dollar, via two scenarios, the win-win ones:

  1. Trump-care passes the House: In this scenario, Trump comes out as the winner and can continue with other topics that markets care about much more: tax cuts and infrastructure spending. The bill might still fail or be amended in the Senate, but an initial political success opens the door to further policies, ones that are of higher interest.
  2. Trump-care fails:  Under Trump’s ultimatum, this is also a market-positive outcome, as Trump will have moved on to easier tasks. Healthcare is complicated and requires the highest amount of political capital. Tax cuts  should be  easier.

These are the market perceptions at the moment and they could change.  In the longer term, it is not a win-win but a lose-lose.

  1. Trump-care becomes law: According to estimates, millions of Americans will lose their coverage, many of whom are Trump voters. This will come back to haunt Republicans in their constituencies  and could cost them their  majorities in the 2018 mid-term elections.
  2. Trump-care does not become law: Sure, he will proceed with other priorities, but he will have lost some political capital.

In any case,  there is a much bigger  shadow hanging over Trump.

The vote is expected late in the day, close to when markets close. The full reaction could wait for Monday’s open.


Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.