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By xemarketanalysis November 7, 2018 11:34 am
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    XE Market Analysis: US Congress is a Red-Blue Split, Brexit Deal Optimism Buoys GBP

    OVERVIEW

    • The US Midterm Elections produced the expected split Congress, with a Republican-run Senate and Democrat-dominated House of Representatives.
    • Pundits are pessimistic that the US Government will be able to pass additional economic stimulus programs, driving the Greenback down relative to competing currencies. 
    • BBC reports a Brexit deal should be in place by the end of November, pushing the GBP up for the third consecutive day. 
       

    HIGHLIGHT

    The US Dollar is dropping against the other global currencies today following midterms which, as expected, saw Democrats take control of the House of Representatives and the Republicans defending its dominance in the Senate. Though the US economy is mostly thriving, experts fear it will be challenging to stimulate economic growth in a Congress divided against itself. The mystery as to whether the US Federal Reserve Bank will end its cycle of increasing interest rates will be soon solved as the Fed kicks off a two-day meeting today. 

    US DOLLAR

    Optimistic market analysts feel the gridlock which will result from the checks and balances of a split US Congress offer some upside potential. Though the US Dollar is down again relative to competing currencies, the sentiment is generally positive that it could mean relief from interest rate hikes and cause President Trump to focus on international trade deals instead of domestic matters. USD dropped against GBP to 0.76025 from a high of 0.76442.

    BRITISH POUND

    GBP is up for the third day in a row and has climbed by 3% on the week. The BBC reports a Brexit divorce deal should be in place by the end of November. The Northern Ireland border debate continues to be the point of contention, and EU Chief Negotiator Michel Barnier says more work needs to be done before scheduling a special summit. 

    EURO

    The EUR USD pair had a positive day today, closing at 1.1479 after opening at 1.1402. European Central Bank President Mario Draghi reminded Italy's Finance Minister Tria that the Italian government needs to take a disciplined approach and deal with their troubling debt. Draghi said that EU rules could require EU countries to place disciplinary actions against Italy which could lead to sanctions. 

    CANADIAN DOLLAR

    The Ivey Purchasing Managers' Index was the most significant Canadian data announcement today, and it posted a surprising 61.8 rate for November, compared to 50.4 in September. Data on housing starts will be released tomorrow. USD CAD is at 1.31167, up from a low of 1.30596.

    AUSTRALIAN DOLLAR

    The AUD traded in a tight 0.7213-0.7300 range today. Australia's government is expected to block a Chinese takeover of APA, which controls over half of the country's pipeline network. 

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