Congressional Juggling:
The people of the United States have spoken! With both Trump’s Republican party and the Democrats claiming victory over the mid-term elections in the public eye, markets have been more decisive in the face of the ballot. The Republicans held control of the Senate, however, ceded power of the House of Representatives to the Democrats. Markets have interpreted the mid-term elections by undermining the value of the US Dollar, likely pricing in the increased degree of political gridlock that the United States will face in pursuing economic growth. For months, economists and strategists alike have been debating when will economic growth in the United States peak. Given Trump’s pro-market and pro-growth presidency, political headwinds prevent fiscally driven economic growth, increasing the impetus for Powell’s Federal Reserve to pause its interest rate hiking phase. Positively, with the House being controlled by the Democrats, Trump’s capacity to increase the United States’ extant burden of debt does limit the extent to which the White House could drift into fiscal profligacy. Italy’s spending plan remains in the foreground of the picture of Eurozone risk with signs of inflationary pressure in the Eurozone being overwhelmed by political instability. The Pound received a sustained yet light bid at market open as investors continue to orientate themselves towards a long-awaited Brexit deal.
Discussion and Analysis by Charles Porter
A weaker Dollar: Trump vs. Powell The Dollar continued to lose ground yesterday as the truce between Israel and Iran appeared to continue to hold. There has been a noticeable return to focus upon macro and monetary influences in major currency pairs. Yesterday, Fed Chair Jay Powell provided his semi-annual monetary policy report before the […]
Big Girls Don’t Cry A bond market tantrum and one of the sharpest one day sell offs in Sterling for several years appear to have been catalysed by the Chancellor’s appearance in PMQs yesterday. First: the back story. This Labour government has faced some embarrassment in recent weeks trying to get its welfare bill through […]
Next level EURUSD has managed a relatively smooth ascent to its current levels, around 1.18. That is despite significant resistance levels, most notably around 1.17. A large collection of option strike prices gathered around this key level and the price history of the pair shows us its significance. Sustained closes above this level since last […]