Currency markets are holding within tight ranges ahead of the much-anticipated US mid-term elections today, 6 November. Pricing in the possibility of the Democratic Party winning control of the House of Representatives, opinion polls suggested that there is a strong chance for that to happen. But Donald Trump’s Republicans are likely to retain control of the Senate.
A Republican victory in both chambers is likely to boost the US Dollar. However, a split vote would be bad news for the president, making passing laws much harder than in the first two years of his presidency. Moreover, it would increase the calls for his impeachment.
Overnight, the Pound neared a 2-week high after reports that the European Union and Britain may be inching close to an orderly Brexit. Negotiations on the Irish “backstop” are progressing, while Prime Minister Theresa May is reported to be softening her stance on the issue in the hope of clinching a deal ahead of Brexit talks with French President Emmanuel Macron at a First World War memorial event later this week.
Away from Brexit, European finance ministers called on Italy to back down on its 2019 budget and to conform with the EU rules. Ahead of a deadline set for next week, Rome has resisted calls to reform and refusing to change its disputed deficit plan.
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