Summary:
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Greenback dips after soft US data
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UK Supreme Court rules against PM Johnson
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Trump: “Hopes for allowing China into WTO have failed”
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US indices in the red after bright start
The US dollar has come under pressure this afternoon after the release of two worse than expected data points from the US. The worse news came from the September Conference Board consumer confidence which fell to 125.1 vs 133.0 expected after a prior reading of 135.1 - the highest since 2000. While the reading itself isn’t too bad, and looks worse due to the strong prior print the future expectations component also showed a marked drop to 95.8 vs 107.0 prior. At the same time the Richmond manufacturing index dropped to -9 from +1 previously, with an expected reading of +2. The market reaction saw both the EURUSD and GBPUSD move up to their daily highs with the fromer moving above the $1.10 handle and the latter up through $1.25.
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It’s been a bit of a bumpy day for the pound with the main headline news that the highest court in the UK has announced a landmark ruling in a highly contentious case, finding that the decision to prorogue parliament was unlawful and that the Queen’s order to do such should be squashed. Earlier the judges also found that the matter surrounding the recent prorogation of parliament is justiciable - IE able to be reviewed by the courts. There’s been much outrage at the move from the PM to prorogue as another key Brexit deadline approaches, but due to the uncharted territory we currently find ourselves in there was some confusion as to whether the move was a case of simply pushing the limits or outright unconstitutional.
The pound moved higher in the initial response with the defeat for the government effectively preventing what would have been the setting of a dangerous precedent. Had the court ruled that the matter was not justiciable, then the PM may well have felt further emboldened to pursue unorthodox tactics to keep no-deal on the table and engage the UK in a game of high-risk brinkmanship.
US indices began in the green with the S&P500 trading comfortable above the 3000 mark before the release of the aforementioned US data. Equities dipped on the news before receiving another blow from Trump’s UN address where the US president stated that hopes for allowing China into WTO have failed. Selected comments were as follows:
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Hopefully we can find a deal that's good for both countries, but I will not accept a bad deal
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China hasn't adopted promised reforms
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China uses heavy state subsidies, steals IP
The German Dax has also fallen this afternoon with the benchmark trading back below the 12300 mark at the time of writing.
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