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18th of November 2018


XE Market Analysis - Sterling Rises on Brexit Hopes and US Dollar Fades Before Midterms

OVERVIEWSterling rallied today after Britain reportedly is close to a divorce deal from the EU The Greenback lost altitude as Americans, and currency watchers brace for tomorrow's US Midterm Elections Currency analysts predict the Euro will rally by over 2% against the Greenback, yet skepticism remains.    HIGHLIGHT

As Americans prepare for a dramatic midterm election Tuesday, Brits are hopeful that PM May and EU Chief Negotiator Michel Bernier will soon serve up a tasty Brexit deal with a side of customs agreement. After several months of declining value for the GBP, the UK has developed an appetite for positive news from parliament. GBP EUR pair climbed to a high of 1.158 on the day before closing at 1.14211. 


After weeks of gains flying high on positive employment, earnings and GDP news, the USD took a dip relative to competing currencies. Oddsmakers and political seers are predicting a win for the Democrats in the House of Representatives and for the GOP to retain a Senate majority. Following the Tuesday midterms, the Fed is scheduled for data releases. The Greenback rode some gnarly waves relative to the Sterling today but ended the day near where it started at 0.76639. 


A suspicious package was found by London Police Monday near Parliament, but many Brits are more curious about the mysterious contents of a rumored Brexit agreement with considerable trade ramifications. With only five months remaining before Brexit takes hold, investors are wiping their brows and eager for details. Sterling rallied to a 10 day high against the USD at $1.3065, and up 0.4 percent against the Euro to 87.33 pence. UK and European officials are playing down the rumors. 


The Euro is up slightly on the US Dollar, by 5.3 basis points to reach $1.140. The Euro wasn't as much lifted against the Greenback as generally remaining unchanged against a US currency which investors are eyeing tentatively before tomorrow's midterm elections. 


Bank of Canada Governor Stephen Poloz expressed optimism about volatile markets and higher yields for long-term bonds in a speech to a business audience today. Poloz said indicators point to normalcy, not a gloomy economy as some business leaders fear. The BoC is hopeful the US-China Trade spat will soon come to an end and was conservative about growth forecasts. The Loonie also remains mostly unchanged at the close at $1.31084 after opening at $1.31136.


The Australian Dollar is also up slightly against USD by 0.21%. As trade tensions continue between the US and China, Australia's iron mining sector bears the brunt. Australia's Central Bank is expected to keep interest rates low at 1.5%. The AUD USD closed at 0.72120 after a low of 0.71830. 

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