Daily Market Update

Elections Tuesday. Dollar solid and safe.

November 05, 2018

The U.S. Dollar continues its strong run ahead of the most expensive midterm elections in U.S. history.

Overview

All the tough and no-holds-barred campaigning will come to an end on Tuesday November 6th, as the House and Senate races help to gauge the national mood. Analysts wonder if much would change in terms of the economic momentum the country is experiencing if Democrats came to power.

Taxes and other spending priorities would be different, but dollar guidance is still likely to derive primarily from solution to other issues globally. Trade concerns with China do not seem to have an immediate solution as Chinese Premier Xi Jinping spoke in Shanghai attacking the U.S.’s tariff approach as “law of the jungle.”

October Markit and ISM Purchasing Managers Indexes will be out at 9:45AM as well as 10AM, and are expected to show a slower level of expansion than the month prior. Further economic strengthening will keep the buck afloat, naturally.

 

What to Watch Today…

  • Markit US Services PMI 9:45AM
  • ISM Non-Manufacturing Index 10AM

The complete economic calendar can be found here.

 

EUR

The Euro remains mostly subdued as Italian budget worries remain and the manufacturing numbers from last week failed to impress. We shall see if any budget headlines start showing optimism, but it is clear that Italy is not the only one thinking to spend more than the EU is comfortable with.

Governments in Spain and the Czech Republic are also said to be putting together budgets with higher deficit thresholds. The lack of cooperation may continue to weigh on Euro long-term if the EU financial heads cannot convince countries to abide by long-established rules.

GBP

The Pound will certainly be tested as this week shall carry tremendous weight for the future of a Brexit deal. An initial divorce agreement is set to be done by November 21st, but Prime Minister Theresa May is going to push for parliament to start giving her some concessions.

Chancellor of the Exchequer Philip Hammond and Bank of England Governor Mark Carney gave some life to confidence by stating that the economy can indeed grow if a solution is agreed upon. Otherwise, bad times are surely ahead with already a deteriorating housing market and companies working on contingency plans.

 

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