Currency Note

US midterm elections will be held this afternoon

By Alex Bennett November 7th, 2022

The U.S Midterm elections will be held this afternoon. The Democrats are set to face a tough battle in dealing with recent economic headwinds.

Markets are still dealing with the aftershock of Kwasi Kwarteng’s September mini-budget as yesterday, the Halifax house price index revealed a year-on-year increase of 8.3%. This slowed from a 9.8% gain in September and points to the slowest pace of growth since this time last year.

The director of Halifax mortgages, Kim Kinnaird said that, “while a post-pandemic slowdown was expected, there’s no doubt the housing market received a significant shock as a result of the mini-budget which saw a sudden acceleration in mortgage rate increases.”

Eurozone retail sales data will be released at 10am. Sales are expected to decrease to -1.5% – If they do, this will point to the fourth consecutive decline in the euro area’s total number of goods sold.

Just before lunch, US markets can expect the NFIB’s business optimism data. In the last data release, the index rose to a four-month high of 92.1. In September, 46% of business owners reported job openings they could not fill, which was three points lower than in August.

The NFIB’s Chief Economist, Bill Dunkelberg said “Inflation and worker shortages continue to be the hardest challenges facing small business owners. Even with these challenges, owners are still seeking opportunities to grow their business in the current period”.

After lunch the big event will be the US midterm elections.

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GBP: sterling marginally unchanged against dollar

The Bank of England’s Huw Pill will spoke at 9am today following the bank’s most recent 75 basis point rate hike. In its November meeting, the Bank warned of more contractions in Britain’s GDP well into 2024 as high energy prices and other factors continue to weigh on spending.

Later this morning markets will find out the UK’s latest 5-year treasury gilt auction data. According to over-the-counter interbank yield quotes for this government bond maturity, UK 5 Year Bond Yield was 3.54% yesterday.

GBP/USD over the past year

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EUR: eurozone interest expected to rise

It was a moderately quiet day for eurozone data yesterday, though there aren’t many key releases scheduled in for this week, members of the European Central Bank will continue to give speeches over the course of the week.

On Monday markets heard speeches from ECB board member Fabio Panetta and this morning there have been two from Chair of the ECB’s  Supervisory Board, Andrea Enria.

USD: Midterm elections will be held at lunch

There are a number of data releases to look out for over the course of this week however the big event markets will be keeping a close eye on today is the US midterm elections.

The Democrats are set to face a tough battle in dealing with recent economic headwinds.  Record high inflation and growing fears of recession are on the cards, however Joe Biden warns that there could be more at stake if republicans take over.

Later this week markets will see US core inflation data.

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