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Caucus race

Everybody has won

Both sides were claiming victory as the results trickled in from Tuesday's midterm elections in the States. The Democrats were celebrating their majority in the House and the president was congratulating himself for an increased Republican Senate majority. The opinion pollsters preened themselves for calling it correctly.  

There were no prizes for the US dollar though. Ahead of London's opening it was down by an average of 0.5% against the other majors, having lost three quarters of a cent to the pound and half a cent to the euro. Three times during the night, as the results came in, it covered a range of more than half a cent against sterling.

Although the result was much as expected - Republicans holding the Senate and Democrats winning control of the House of Representatives - investors were unsure of the implications for the economy. Trump will no longer be able to ram through each and every one of his policies but some of them, such as infrastructure spending could still find bipartisan support. Overall, the economic future looks less gung-ho than in the last two years but there seems to be no cause for major concern(a).

Measured success

Sterling had a more successful day than the US dollar, losing out only to the NZ dollar and the rand. The prime minister apparently has a detailed plan to sell its Brexit strategy to parliament and the people, leading to a Commons vote on 27 November. Although Number 10 once again disowned the leak, it looked credible.

As such, it was positive for the pound, which has strengthened by an average of 1.9% in the last week. The idea that Downing Street is aiming for  "measured success" looks plausible, as does the timetable, which includes a presentation to business leaders and country-wide meetings.

Despite sterling's success it was beaten handsomely by the NZ dollar, which jumped two cents higher overnight on the back of strong jobs data.  Employment in New Zealand was up by 1.1% in the third quarter and the rate of unemployment fell from 4.5% to 3.9%. The numbers were well ahead of what had been fairly pessimistic forecasts.

RBNZ to stick

The Kiwi will be in the spotlight again tonight when the Reserve Bank of New Zealand announces its monetary policy decision. A Reuters poll of local economists found all 16 of them predicting that the bank would keep its Official Cash Rate at 1.75% for a 25th month.

More than half of the panel foresee no rate increase in 2019 either. Against that background it would be a surprise to see any reaction from the NZ dollar.

The economic statistics appearing ahead of that RBNZ announcement offer no greater promise of excitement. Halifax house prices are the only numbers from the UK. Italy and Euroland report on retail sales and Canada releases the Ivey purchasing managers' index. That means investors will devote their time to post-mortems of the US elections and to second-guessing the government's alleged plan to seek early Commons approval for its Brexit strategy.

USD lower following midterm election

USD lower following midterm election

GBP well-placed after another Brexit deal rumoured

GBP well-placed after another Brexit deal rumoured

NZD storms ahead as NZ employment data smash forecasts

NZD storms ahead as NZ employment data smash forecasts

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