David Morrison  |  05/11/2018 09:00
After a dismal performance in October, last week saw gobal equity markets rally sharply into the month-end.
 
Meanwhile, the US dollar lost ground as November began. It had put in a solid performance over the prior month as investors sought out safe-havens due to negative moves in stock markets.
 
Last week both the euro and British pound tested yearly lows, not only due to dollar strength but also euro weakness thanks to Italy’s deficit-busting budget proposals, and a sell-off in sterling on Brexit worries.
 
The USD Swiss franc smashed above parity to hit its highest level in 18 months.
 
Sentiment improved a touch as the new month started on US-China trade deal hopes. President Trump said there will be a deal with China, but his economic advisor Larry Kudlow dampened sentiment insisting that as yet there’s no deal in sight.
 
This week kicked off with a disappointing UK Services PMI release. Sterling give back most of its overnight gains which followed weekend reports that UK PM Theresa May is close to a break-through Brexit deal with the EU.
 
 
Looking at the economic calendar, the US ISM Non-Manufacturing PMI is due Monday afternoon. Then overnight we have the Reserve Bank of Australia’s rate decision where no change is expected.
 
 
On Tuesday we have the US mid term elections. According to pundits the most likely outcome is that Democrats take back control of the House and disrupt Republican’s tax and spend plans. Whatever the result there’s bound to be uncertainty around the Dollar.
 
We also have rate decisions from the Reserve Bank of NZ and the US Federal Reserve on Wednesday and Thursday respectively. Neither cental bank is expected to move on rates.
Then on Friday we have UK manufacturing production and third quarter GDP.
 
Investors will also be keeping a close eye on any progress with Italy’s budget proposals, already rejected by the EU.

Have a great week
 

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