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By xemarketanalysis December 12, 2018 1:53 pm
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    XE Market Analysis: Don't Count PM May Out Yet Despite Vote of Non-Confidence from Opponents

    OVERVIEW

    • UK PM May vows to resist being pushed from Parliament and has the support of at least 158 of her Conservative party allies
    • US crude oil and gasoline inventories exceed 5-year averages. 
    • Gold crept up to $1,245.29 per ounce, as US CPI slides to 0.0 and Core CPI dropped to 0.2 percent  

    HIGHLIGHT

    British PM Theresa May may not have a meaningful vote date, but the GBP USD chart shows a jump higher today. A vote of non-confidence in the PM  is expected to fail to topple her, as she has the support of at least 158 of her Conservative Party backers on her side.  

    US DOLLAR

    The Dollar retreated somewhat as CPI numbers fell in line with expectations. CPI numbers supported the view that the Fed may raise rates at next week's meeting, but it is now expected that if a hike occurs, that it will be dovish. Signs of a weakening US economy are stimulating hopes that 2019 won't see interest rate hikes be as aggressive as previously suggested.  

    BRITISH POUND

    The Pound recovered somewhat and stemmed some of this week's losses as the vote of no-confidence in PM May goes ahead in Parliament. 159 votes are needed for PM May to keep her job, which is expected to happen. Markets have factored this in with Sterling rising over 1% against the US Dollar. Any strength in Sterling could be limited, however, as even if May survives today's vote it is still widely expected that her Brexit deal will be voted down by Ministers.

    EURO

    The Euro is stronger against a basket of currencies today. Italy seems to be prepared to reform their budget. It is now becoming expected that Italy will fall in line with EU regulations, putting their budget deficit target at 2%.

    CANADIAN DOLLAR

    CAD is modestly higher on the day, buoyed by the Canadian Government’s decision to release the CFO of Huawei on $10-million bail after she was detained in Vancouver recently. Chia had threatened severe consequences for Canada unless they release the disgraced telecommunications executive, who has recently become a pawn in ongoing US-China relations. 

    AUSTRALIAN DOLLAR

    The AUD showed signs of life in the wake of President Trump’s suggestion that he may intervene in the Huawei CFO case to secure a China trade deal. The AUD continues to trade as a proxy for global growth expectations, the biggest driver of which has been ongoing China-US trade tensions.  

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