UK prime minister survives confidence vote

4 minute read


Among the first evidence of a thaw in the trade war is an order from China for up to two million tons of US soybeans. There are reservations about the order, which will be filled early next year: it was likely placed by state-owned organisations, for whom tariffs are not an issue, and comes too late in the season to make much of a dent in America's huge stockpiles. Even so, as a sign of easing tensions it was positive for risk-appetite if not for the USD itself.  

On the US statistical front it was another day of shortage. Consumer price index figures were the only data available to investors, and they were not at all exciting. Headline inflation was on target at 2.2%, as was core measure which ignores food and energy prices.  


Ecostats were no more numerous in Europe. German CPI inflation was steady at 2.3% and in France it was unchanged at 2.2%.

There was movement on Italy's contentious budget though. After prolonged pressure from Brussels, the coalition government in Rome reduced the deficit for 2019 from 2.4% to 2.04%. The precision of the number suggests a degree of tongue-in-cheek on Italy's part but the concession should lead to the European Commission turning down the heat.  Another reason for Brussels to turn down the rhetoric is the news that France could easily end up with a deficit of more than 3% next year as a result of Emanuel Macron's efforts to placate the rioting Gilets Jaunes. The EUR is 0.4% higher on the day.


Easing trade tensions between the United States and China allowed the Loonie to tick higher against the USD but its net gain was an almost imperceptible 0.1%. Working against the CAD was confirmation that China has arrested two Canadians - Michael Spavor and Michael Kovrig - for "endangering national security". It would be too much of a coincidence for their arrests to be unrelated to Canada's detention of Huawei CFO Meng Wanzhou.

At a financial level, the only Canadian statistic was for capacity utilisation in the third quarter. It was down by a point and a half at 82.6%


The ruling Conservative party brought a motion of no confidence against their leader, prime minister Theresa May, which went to a vote yesterday. Mrs May won the support of 63% of her MPs, with the voting split 200-117. Media reports throughout the London session pointed to a win for the prime minister and investors responded by marking up the GBP. Confirmation of her success brought a gentle sell-off as speculators took profits on long positions, leaving the GBP 1.0% higher against the USD.

Theresa May is in Brussels today, at a meeting of the European Council with the other 27 EU heads of government.  She will be hoping for some help on the thorny matter of the internal Irish border and the "backstop" that has stymied her efforts to get the withdrawal bill through parliament.  It is not at all clear that the help will be forthcoming.


The yen spent most of the New York session strengthening against the USD and most of this morning's Far East session giving it back. The net result is that the two currencies are precisely unchanged against one another on the day after twice covering a range of just under half a yen.

Japanese economic data overnight were limited to the weekly barometer of international investment flows. Japanese investors bought a net ¥1129bn of foreign shares and bonds; foreigners put ¥1271bn into Japan.

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