s was broadly anticipated going into the vote, Trump’s Republicans were able to retain control of the US Senate and are actually on course to increase their existing majority in the upper chamber. In a blow to the President, however, the US Democrats regained control of the House of Representatives, the second chamber that makes up Congress, for the first time in eight years. This was broadly in line with the opinion polls leading up to the vote.

The political uncertainty of a deviation from the status quo weighed on the greenback this morning. Investors will also be taking on the general view that the greater Democrat majority in the House will significantly hinder Trump’s quest to force through additional tax cuts and infrastructure spending next year, stimulus that could have supported the US economy and the Dollar.

The next test for the US Dollar will be this Thursday’s Federal Reserve monetary policy announcement. With no ‘dot plot’ to be released and no fresh economic projections, the chances of any policy changes are effectively zero. We instead look for clues in the FOMC’s statement regarding the possibility of another interest rate hike in December, currently more than 70% priced in by the market. Comments from the Fed regarding the recent trade developments could also shift the Dollar when the minutes are released at 7pm UK time.

‘Thumbs up’, Sterling up

Optimism over Brexit kept the Pound well supported around two week highs during London trading yesterday. Even a mere ‘thumbs up’ from Brexit minister Dominic Raab was enough to lift the currency higher yesterday, highlighting the intense sensitivity Sterling currently has to any and all news out of the Brexit process. Raab was seemingly in an upbeat mood following a cabinet meeting on Tuesday morning.

Economic data is fairly light on the ground in the UK in the next couple of days, with news out of Brexit likely to remain the biggest driver for the Pound. Friday’s preliminary GDP figures for the third quarter could receive some attention.

Eurozone composite PMI revised higher

Earlier in the trading session, the common currency was buoyed by an upward revision to October’s Eurozone composite PMI. The crucial index was revised up to 53.1 from 52.7, partly due to a much better than originally anticipated performance in the German services sector. This is somewhat encouraging, although it is worth noting the measure remains comfortably shy of its multi-year highs from earlier in the year.

Today’s fresh economic growth projections from the European Commission will be worth looking out for in the Eurozone this week. In the meantime, this morning’s retail sales figures will provide a decent indicator as to momentum in the Euro-area economy in the fourth quarter of the year.