Mid-term Day:
US voters travelled to the polls today with the political composition of the United States on the line. The mid-term elections are closing in on their twilight with seats in Congress’ House of Representatives and the Senate up for grabs. Throughout the day it has grown increasingly likely that votes in the House of Representatives have been won over by the Democrats with voting for the Senate favouring the incumbent Republican Party. The Dollar has lost some ground throughout the day to an appreciating Pound Sterling and a firm Euro. Minute by minute, the voting composition of the US polity becomes clearer with an inability to pass laws within the Senate pushing investors to liquidate holdings in a more exposed and politically uncertain US economy. The Pound has received good support throughout the day as markets asses the progress of May’s Cabinet meeting today. May has met with her cabinet to tell more opinionated leavers and remainers alike to moderate their views in the name of Brexit progress. At this stage, no news is good news as quietism by May’s ministerial colleagues is thought to signify tacit agreement with the Prime Minster’s Brexit plan. Unsurprisingly, therefore, the Pound has continued to appreciate step by step throughout the day. Italy continues to create an obstacle on the European front with the Commission and Italian leadership at loggerheads.
Discussion and Analysis by Charles Porter
Weren’t Tariffs USD Negative? The Dollar proved sensitive to headlines regarding trade during the US overnight session. However, contrary to what many commentaries would have you believe, as the risk of tariffs escalated the Dollar rose. The 90-day pause following Trump’s April ‘liberation day’ tariffs had been set to expire this coming Wednesday. To the […]
Weak foundations After a rally of around 15% year to date, there is significant cognitive and technical room for consolidation within EURUSD. Implied volatility has been rising given the macroeconomic backdrop that markets have encountered this year. Even within such an environment, a 15% rally in the market’s most traded instrument is still enormous. But […]
Dollar Reserves With the passing of Trump’s original deadline for the reimposition of liberation day tariffs yesterday, markets have breathed a sigh of relief. July VIX futures continued to slide lower. Moreover, what may surprise anyone who had been expecting the issue of tariffs to resurface following the passing of Trump’s new deadline, so too […]