Canadian dollar holding ground ahead of US mid-terms

Key Movers

The USD has gained slightly against the GBP overnight and held steady against other majors as markets await the results of today’s US mid-term elections.  There has been much talk about a split house and how that might impact markets and efforts to fight inflation.  It seems in early polling that the Republicans are set to take back the House of Representatives while the Senate is up for grabs.  A split congress may make it difficult to pass fiscal stimulus should the US economy hit a recession in 2023 so investors have their eye on the results.

The euro say slight gains in the overnight markets as a number of speeches from ECB board members are pointing towards a continued hawkish stance on future rate hikes.  The trading zone is dealing with 10%+ inflation YOY and the bank is focused on the battle to bring prices down.  Expectations are for a 50 point hike in December to follow the 75 point hike we saw at the end of October.

The GBP lost some ground to the USD during the early European session after advancing more than expected yesterday.  Slower than expected retails sales in the UK were a reminder of future head winds for the Bank of England and the new British Government heading into its battle with inflation.