The vision of fiscal stimulus (via personal and corporate tax cuts, infrastructure boom, deregulation) was what pushed Wall Street higher and higher since the US elections. Suddenly the markets no longer take the implementation of this fiscal agenda for granted. The first serious reality check in the form of a vote on health care bill can be failed on Thursday.

US equities dropped about 1% and so did DAX contracts, despite the positive start of the day due to a market-positive result of the first French presidential debate.The reaction to the market chatter on the possibility of Republicans losing effective majority in the House was particularly strong in case of precious metals and JPY – being a haven currency. 

It started with a USD sell-off, but at one point AUD made a U-turn and showed a more typical risk-off response ending the day worse off vs. the US dollar. Changes of industrial metals might have played a role here. The Aussie also had a difficult start of the day due to RBA minutes.

AUDUSD dropped out at some point, signalling that investors started by escaping from the USD, but now are seeing that the Obamacare vote story requires a proper risk off reaction as it would weigh on the global sentiment.

NZD received some support from milk auction, but it also suffers from worsened overall sentiment. RBNZ meeting on Thursday is the next big local event for the currency. 

Euro extended its gains on the weaker dollar, an improvement in sentiment after French debate and as a technical breakthrough was in play. The current bullish channel contained the pair just above 1.08 in the second half of the day.

CAD saw yet another strong release, this time on retail sales which helped it hold against oil weakness, but not against the change of sentiment in the afternoon.

UK inflation went above BoE target, beating market expectations. CPI has risen by 2.3%, the fastest pace since September 2013, core inflation rose to 2%, the fastest since mid-2014. The release caused a sharp rebound of the GBP and sent the GBPUSD above an important resistance and made it the best performing G-10 currency with a 1% gain vs. USD today.