Good morning
Remember, remember the 5th November, when they voted for Harris or Trump
With no decent selection in this election, do we think the dollar will slump?
Sorry, not my finest work but certainly not my worst. So today’s the day of the US election. Results won’t be known until the early hours of Wednesday morning at the earliest but that won’t stop the market listening to the polls. There is a big chance that the outcome is delayed for recounts and legal issues given how close the result is expected to be. The new President, whoever it may be, will not take office until 20th Jan 2025 so there is plenty of time to get the result correct. Expect a bit of volatility.
Yesterday was reasonably quiet, USD was a fraction higher with GBPUSD down around 1.2935, down from a high around 1.2990, EURUSD went into the London close around 1.0880 after seeing very tight ranges. GBPEUR was towards the lower end of the days range at 1.1890 having been up at 1.1915 or so through the day.
This morning though GBP has made a very slight recovery, with GBPUSD back up to 1.2975 and GBPEUR 1.1920, EURUSD barely changed at 1.0885. I think we’re likely to see GBP uncertainty as we head into the BoE meeting. A 25bps cut is expected but is certainly not a done deal and even if we do see a rate cut there is a chance that BoE gives a somewhat hawkish outlook for 2025 compared to current expectations.
Overnight the RBA left rates unchanged at 4.35%, making it clear they are determined to get inflation back to target levels and that they will do whatever necessary to ensure that happens and still see their rates as less restrictive than other countries. Cuts seems to be a long way off. All pretty much as expected and as a result AUD hasn’t really been impacted, with GBPAUD 1.9630 as I type.
Meanwhile the RBNZ financial stability report suggested weakness in the NZ domestic economy is more pronounced with both discretionary consumer spending and business investment both lower. Meanwhile RBNZ GOv Orr is concerned that the NZ economy is lagging the reduction in rate cuts. I’m not sure why that’s a surprise to be honest, economies usually lag the impact of rate moves. NZ unemployment out tonight is expected to show a jump in the unemployment rate to 5%. GBPNZD is 2.1635. AUDNZD is 1.1025, there must still be some upside potential here.
UK university tuition fees rise for the first time in eight years by around 3% to £9,535. The press are all over historic press reports showing Labour members such as Starmer and Rayner vowing to abolish tuition fees I honestly don’t think people mind paying a bit for tuition, but as with all things in life, they expect a decent service to come as a result. But I know Uni students who get just a handful of hours of face to face teaching every week, and then there could be at least a couple of hundred people in those lecture so its not exactly one to one tuition.
The rest of their learning is remote, through online seminars, and I even know of universities who ask the second and third year students to teach those in the first year. Now, teaching others is actually a good way of cementing one’s own understanding, so perhaps not a bad thing, but large fees should surely offer more for students.
Important as university is, some 20% of people would ultimately have been better off financially had they not gone to university, and perhaps higher fees will make potential students think whether their chosen degree is actually any more worthwhile than a career with some on-the-job training. It is possible that higher fees may deter some people who would undoubtedly benefit from a university education through their lives, although I would hope the £287 extra each year announced today doesn’t become a decisive factor.
Workers have ended a seven week strike at Boeing as a whopping 38% pay rise deal is agreed. The rise is spread over four years and also comes with a one-off payment of US$12,000 plus tweaks to retirement plans. Whether the deal protects jobs remains to be seen, Boeing recently said they’d be looking to cut some 17,000 jobs after several high-profiles failures with planes and space craft.
Everything is about the US election today and USD will get pushed higher polls point to Trump or lower if polls point to Harris. Let’s not ignore the US ISM services PMI this afternoon which does have market impact. We also have the minutes from the most recent BoC rate meeting. They were dovish at the time, and as a result the market is looking for 50bps cut in both Dec and Jan, I’d expect these minutes to support that notion. Still, with Canada jobs data Friday we could see little reaction unless the minutes really say something very different, which would be a surprise.
- 13.45 US S&P composite PMI
- 14.30 ECBs Lagarde speaks
- 15.00 US ISM services PMI
- 18.30 BoC minutes
- 18.30 ECBs Schnabel speaks
- 21.45 NZ employment
- 23.50 BoJ minutes
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