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Bets on May to Win Confidence Vote

Published December 13, 2018

The New Zealand dollar underperformed overnight, with trade talk sentiment turning more positive, causing US stocks to rally. Meanwhile, UK Prime Minister Theresa May is up for a vote which may see her forced out of parliament.

Trade Talk Optimism

US stocks rallied overnight as signs emerged that China will ease its “Made in China 2025” industrial policy. This has added to the optimism of President Trump’s upbeat comments on trade talks. President Trump also said he will intervene in the planned extradition of Hauwei top executive Meng Wanzhou if that helps secure a trade deal.

In other Trump news, he’s commented overnight that he was not concerned that he could be impeached and that hush payments made ahead of the 2016 election by his former personal attorney Michael Cohen did not violate campaign finance laws. “It’s hard to impeach somebody who hasn’t done anything wrong and who’s created the greatest economy in the history of our country”. Impeachment requires a majority to pass the House of Representatives, where Democrats will take control in January. However, removal from office requires a further two-third majority in the Senate where Trump’s Republicans hold power.

In data news, the US consumer prices were unchanged in November, following a 0.3% increase in October. The flat reading for November was in line with economist’s forecasts, but this did include a sharp fall in the price of gasoline. Underlying inflation pressures remained firm with core consumer prices up 2.2% year-on-year.

May Promises to Step Down Before 2022 Election as She Fights Leadership Challenge

The pound has recovered some lost ground, with May expected to win the confidence vote that is currently underway, with the results expected at 10:00 AM NZT. British Prime Minister Theresa May also pledged to step down before the next election in hopes of winning over wavering lawmakers before the no confidence vote. May said a new leader could delay exit from EU by the end of March, with Article 50 either needing to be extended or rescinded.

Data Tonight:

France and Germany Inflation numbers
ECB Rate Decision