The US Dollar faced heavy selling pressure in Asian trade after two more Republican Senators withdrew support from the healthcare reform bill supported by the White House, robbing it of the votes needed for passage. The initiative's failure seemed to cast doubt on the administration's general ability to turn campaign promises into policy.

This sapped hopes of seeing the tax cuts, deregulation and fiscal spending increase that were expected to boost corporate earnings and gin up inflation, forcing the Fed into a steeper rate hike cycle. Not surprisingly, this saw the greenback falling alongside Treasury bond yields and S&P 500 futures. Asian stock exchanges likewise suffered.

The Australian Dollar soared against this backdrop, shrugging off a worrying set of minutes from July's RBA policy meeting, as fading Fed rate hike bets sent capital in search of yield-seeking alternatives. The similarly high-beta New Zealand Dollar likewise found support, erasing losses sustained early in the session following disappointing inflation figures.

UK CPI figures headline the European data docket. The headline year-on-year inflation rate is expected print at 2.9 percent in June, unchanged from the prior month. PMI survey data pointing to weakening pricing power and a recent run of disappointing UK statistics relative to consensus forecasts hint at the treat of a downside surprise. Such a result may strengthen the doves at the BOE and is likely to hurt the British Pound.

Beyond that, a dull offering of scheduled US event risk may keep the focus on the unwinding of the so-called “Trump trade”. Besides the trading patterns noted overnight, this may translate into gains for the perennially anti-risk Japanese Yen as sentiment sours. Follow-through may be undermined as traders shy away from strong directional commitment ahead of the upcoming BOJ rate decision however.