US Dollar Remains Weak, Global Shares Rise on US Midterm Election Results

Market Reviews

US dollar continues to decline, pressured by midterm election results. Following US congressional midterm elections, the Democrats regained control of the House of Representatives for the first time since 2010, but the Republicans maintained control of the Senate, and have increased their majority. Meanwhile, 10-year yield is also down 0.12 at 3.203.

Australian dollar is the strongest one, followed by New Zealand dollar. Swiss franc is the third strongest. Euro remains also firm. Japanese yen and British pound are weak. The pound falls amid lack of progress of any kind in Brexit negotiation.

On stock markets, FTSE gained 1.29%, DAX added 0.86%, CAC ose 1.25%. Asian stocks were mixed with Nikkei closed down 0.28%, China Shanghai SSE dropped by 0.68% to 2641.34. Hong Kong HSI and Singapore Strait Times rose 0.10% and 0.15% respectively.

Today’s data showed, that Eurozone retail sales rose 0.0% mom in September versus expectation of 0.1% mom. German industrial production rose 0.2% mom in September versus expectation of -0.1% mom. Swiss foreign currency reserves rose to CHF 753B in October. UK Halifax house prices rose 0.7% mom in October. Japan leading indicator dropped to 103.9 in September, labor cash earnings rose 1.1%.

The results of the meeting of the Reserve Bank of New Zealand (RBNZ) will be announced today. It is widely expected, that the RBNZ will keep the OCR at 1.75% and confirm that the next step may be up or down, while maintaining a cautious approach to monetary policy. OCR will probably remain unchanged, even though data on GDP, inflation and the labor market surprised by an unexpected increase.

Data on the New Zealand labor market showed, that unemployment rate fell to 3.9% in Q3 versus expectation of 4.4% (the lowest level in a decade since June 2008). Employment rate rose 0.5% to 68.3% (the highest since the series began 30 years ago). Participation rate also rose 0.2% during the quarter to 71.1%. Employment grew 1.1% qoq versus expectation of 0.5% qoq.