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It’s a dour start to the week for the Donald’s dollar, which is heading back down to where it was before Mr Trump was elected president of the US.

The inevitable flip side: a major boost for the euro and sterling.

The pound is up by 0.6 per cent so far today to $1.2550, the highest since late-February. Not bad, considering the UK government is on Wednesday due to trigger the Article 50 process that will end the country’s membership of the EU.

The euro, meanwhile, is up by a similar degree to $1.0863, its highest point of the year so far, and indeed the highest since early December.

As we noted earlier, the yen is also on a tear, with the dollar at Y110.20 or so, down by 1 per cent on the day to the lowest since November.

The pullback in the buck follows the failure of president Trump to sweep new healthcare legislation through Congress, challenging the widely-held assumption that he will be able to push through tax reform and infrastructure spending.

Dana Peterson and Tina Fordham at Citi write:

Markets viewed the House [healthcare] vote as a litmus test for the viability of the Republican mandate to deliver on fiscal stimulus and durability of the “Trump trade.” Unless Republicans quickly gain traction on tax reform, the post-election exuberance that drove financial market, consumer and business sentiment higher, could continue to reverse.

Rabobank is among those watching very warily. Writes Piotr Matys at the bank:

An inability to approve the American Healthcare Act raises concerns about the prospects of far more important fiscal stimulus, which has been the main driving factor behind impressive gains in global stocks since Mr Trump got unexpectedly elected. The sell-off witnessed last week, when the S&P 500 plunged the most since the US presidential election, could be just the beginning of a deeper correction given that the defeat of the healthcare bill is likely to undermine market confidence.

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