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Mayday for May

Published December 12, 2018

by Nicholas Cork

AUD spent the last 24 hours sidelined within 0.7180/0.7220, peaking at 0.7220 as GBPUSD peaked above 1.2600, but disengaging with the GBP as it collapsed back to 1 year lows below 1.2500. The GBP had spent the start of the evening clawing back half its losses from the previous day until the talk of enough votes/letters for a no-confidence play against PM May hit the news wires and that one year low was ushered in very quickly. As I type there is still no confirmation that the required 48 votes have been received, but the market will be a bit twitchy this morning in anticipation of an announcement. Update – confidence motion possibly Wed night.

The DOW had a mixed night, rallying strongly on news that China will reduce tariffs on US made cars from 40 to 15 per cent, before closing lower after Trump threatened to shut down the government over funding for his wall, in fact he said he would be proud to shut it down. The threats were made in the Oval office whilst meeting with top Democrats, and is worth a look as it was recorded.  Also, US Yields ticked higher again for the 2nd day running.

News that China has arrested a former Canadian diplomat has grabbed some attention as it may have just upped the recent ante, with Canadian Minister Goodale saying that he was “deeply concerned” but there was “no explicit indication at this moment” that it was linked.  The detention was announced as the Huawei CFO returned to court in Canada. This is shaping up to be a headline driven day for markets.