Despite North Korea’s best efforts to grab attention with their latest missile test overnight, it is US and European politics that dominate investor sentiment this morning.

The Dollar is in bouyant mood once again as strong economic data and positive noises from the incoming Federal Reserve Chairman, Jerome Powell suggest more interest rate rises are on the horizon.

FxPro analyst, Edward Anderson commented “US consumer confidence has surged close to a 17-year high in November, due to a by a strong labour market, while house prices rose in September, which should underpin consumer spending and boost economic growth. This adds further confirmation to the Fed that a December rate hike is justifiable.”

“Fed Chair nominee Powell, during his Senate confirmation hearing, pledged to continue the Fed’s current approach to monetary policy, by gradually raising interest rates so long as economic growth remains healthy. He commented that the case for a December rate hike ‘is coming together’.” Anderson added.

Reports that the UK and EU have agreed a settlement for the Brexit divorce has boosted the Pound with investors clearly keeen to see further progress in negotiations. ADS Securities analyst, Konstantinos Anthis suggested “The report mentioned that the two parties have agreed to a final amount between 45 to 55 billion Euros and even though the agreement is not yet formal traders are clearly excited by the prospect of progress on this issue. ”

The Pound’s surge, however, was bad news for the FTSE this morning. The UK’s main index was down more than 0.5% in early trading despite a strong start from the banking, retail and housebuilding sectors. The former, no doubt benefiting from yesterday’s Bank of England stress test results while retail and housebuilders were boosted by a stronger sterling.

Over in the US, equity markets closed at record highs after the Senate Republican tax reform bill received approval for a full vote in the upper house, which saw Financial stocks surge. Accendo Markets analyst, Mike van Dulken noted “The Dow Jones climbed over 200 point as JP Morgan and Goldman Sachs lead risers, with only Apple declining by a meaningful amount. The S&P 500 enjoyed its best day since 11 September as Financials outperformed, while the Tech-heavy Nasdaq also climbed by 0.5% to a fresh record closing high.”

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29th November 2017
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