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he third quarter advanced estimate for US GDP is due at 8.30am NY time
US elections: Clinton emails issues resurface – USD falls
The FBI has reopened the investigation regarding Hillary Clinton’s usage of a private email server. The issue hurt her campaign when it was a hot topic back in July. Since then, things have materially changed in the elections, with Trump’s sexual assault bragging helping Clinton lead “big league” (among other things).
The revelation, coming close to the end of the trading week, causes the US dollar to slide across the board.
The gap has already been slimming down ahead of these revelations. The chances of a Clinton victory have slid from 87% to 81% according to FiveThirtyEight, as shown here.
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UK Interest Rate Decision – Will it cause volatility on the Markets?
You would have to have been living in a cave to not have witnessed the fall in Sterling following the vote to leave the EU. There is huge uncertainty surrounding the UK economy. We have seen positive data releases which would usually cause pound strength do little.
Another factor which should have caused pound strength was Mark Carney, governor of the Bank of England stating he would stay in his position until after Brexit negotiations should have restored some kind of certainty to the UK economy. It did nothing, a 40 pip move on GBP/EUR which quickly readjusted.
There is the possibility of a rate cut tomorrow which would cause a further drop for Sterling. If you are a pound seller I don’t think there is much point hanging on until after the event as even if there is no cut I would not expect any significant rally for the pound and there is very little to signal a rise for the pound short term.
I doubt there will be any change as Carney has been questioned over the drop just after Brexit. A further drop to new record lows would definitely put the BOE under scrutiny.
source
ECB monthly bulletin: See no signs of convincing upward trend in inflation
ECB economic, formerly called monthly, bulletin now published 3 Nov
The bulletin is basically a re-hash of the ECB presser statement
Full report here
British Pound is Week's Best G10 Performer, US Dollar is Second-Worst, Euro Holds Centre Ground
A strong short-covering rally in Pound Sterling saw the currency easily outperform its G10 rivals, can further gains be expected over coming days?
Pound to Dollar exchange rate today (5-11-16): 1.1237
Pound to Euro exchange rate today: 1.2520
Euro to Pound Sterling exchange rate today: 0.8902
The currency performance board for the week 31st October-4th November saw GBP come out on top while the US Dollar only marginally managed to outperform a maligned Canadian Dollar.
Indeed, the biggest story involves the negativity heaped on North America currencies as polls tighten ahead of the November 8th U.S. presidential elections.
As can be seen the US Dollar, Canadian Dollar and Mexican Peso all had a rotter of a week:
"The week has all been about the shrinking opinion poll gap between Hillary Clinton and Donald Trump. A 7 point lead for Mrs Clinton two weeks ago has been whittled down to 1.3% on the last reading and anxiety haunts the currency market. The Dollar’s the main loser in G10, beating only the Canadian Dollar which is an obvious ‘loser’ from Mr. Trump winning," says Kit Juckes, a strategist with Societe Generale in London.
The second big story of the week was the short-squeeze higher in Sterling.
“A game change of a week for Sterling had it up around 2.5% and on pace for its best since March,” says Joe Manimbo at Western Union. “The short-run game for the pound changed for the better after the risk of an economy-choking hard-Brexit receded after the U.K. High court ruled that Parliament would have to approve the government’s Brexit plan.”
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SNB say they are ready to intervene in currency markets if needed after US election
SNB governing board member Andrea Maechler out on Reuters 7 Nov
No great surprise get the official "we'll be right there" message similar to the 24/7 monitoring over Brexit given the potential impact on the safe-haven CHF if Trump prevails.
Personally I'd be looking for a safe-haven whichever of them gets in!
Maechler's comments are in an interview on Swiss TV due to be broadcast later today.
They've been less than aggressive in recent days possibly keeping their powder dry for when/if the proverbial really does hit the fan.
Voting kicked off on Tuesday as around 226 million eligible voters are set to decide whether Republican nominee Donald Trump or Democratic candidate Hillary Clinton will be the next U.S. president.
With Clinton in a narrow lead, nerves were on edge as most analysts predicted a market rout if Trump became the surprise victor.
Market news was awash with comparisons to the U.K.’s referendum on its membership in the European Union which, despite all polls pointing to a victory for the “Remain” campaign, ended in a Brexit triumph.
The first exit polls, which are a projection, are expected to come out on Tuesday night at around 7:00PM ET (00:00 GMT on Wednesday). Results will be declared state by state.
If the outcome is clear, the television networks are expected to make their official call at 11:00PM ET (04:00 GMT Wednesday).
2. Global stocks on pause ahead of election outcome
After Monday’s rally on the news that the FBI again found no case of wrongdoing in its examination of Clinton’s e-mails which markets interpreted as a sign that the Democratic candidate’s chances to become president had improved, investors were cautious about placing more money into equities on Tuesday.
Asian stocks closed mostly higher, though signs of caution were clear in Tokyo as the Nikkei closed with meager losses of just 0.03%.
European stocks traded mixed in early morning trade with moves limited by the focus on the U.S. elections.
U.S. futures were pointing to slight losses at the open on Tuesday as investors took profits after Wall Street staged its biggest jump since early March a day earlier. At 5:58AM ET (10:58GMT), the blue-chip Dow futures edged down 0.07%, S&P 500 futures slipped 0.13% and the Nasdaq 100 futures dropped 0.14%.
3. Mexican peso takes a breather
The Mexican peso gave up some ground against the dollar (USD/MXN) on Tuesday after having jumped 4.2% in the last three trading sessions in a sign that investors believe a victory for Clinton over her Republican rival Donald Trump in Tuesday’s election is now more likely.
The Mexican currency, which has acted as a barometer of the markets' perception of a likely Donald Trump victory, has been sensitive to developments in the election amid fears that a victory for Republican candidate Donald Trump could damage the country’s economy based on his promises to renegotiate the North American Free Trade Agreement.
4. Traders keep watchful eye on gold
Gold prices inched higher during European hours on Tuesday, as financial markets awaited the outcome of the U.S. presidential election.
The safe haven asset has undergone severe market moves as developments surrounding the presidential race caused volatility.
Prices of the yellow metal rallied to a five-week high of $1,309.30 last Wednesday, as investors were rattled by signs the U.S. presidential election race was tightening.
It then sank to a one-week low of $1,278.60 on Monday as demand for safe-haven assets ebbed after the FBI said that no charges were warranted in the case of Democrat Hillary Clinton's use of a private email server.
5. Crude buoyed by Clinton victory bets
Oil prices were higher in mid-day European trade on Tuesday, extending sharp gains from the prior session as market players positioned themselves for a win by Hillary Clinton in the U.S. presidential elections.
Crude jumped more than 1% on Monday as risk appetite improved on the news that Clinton was off the hook with the FBI.
Markets have tended to see Clinton as the status quo candidate, and news favoring her bid often boosts risk appetite.
Meanwhile, oil traders continued to weigh prospects of a coordinated production cut among major global oil producers.
The Iranian energy minister said on Tuesday that he was optimistic of a deal being reached at the official OPEC meeting on November 30, though analysts remained skeptical of a significant deal being hammered out that could dent the global supply glut.
U.S. crude oil futures gained 0.40% to $45.07 at 5:58AM ET (10:58GMT), while Brent oil traded up 0.50% to $46.38.
source
Can USD Survive The Election?
3 Potential Election Outcomes
The greatest market impact would be a Trump victory and a willing Clinton defeat. In this scenario, the U.S. will have a man with untested political skills and unknown policies in office. In this case, the biggest winners will be the euro, Swiss franc and Japanese yen while the biggest losers would be the U.S. dollar and Mexican peso. The Canadian dollar should also fall but its moves could be tempered by a weakening U.S. dollar.
The greatest relief for foreign investors would be if Clinton becomes President and Trump willingly accepts defeat. She’s not without her own problems (and there are many) but the transparency of her policies and the continuity of stability would send the U.S. dollar sharply higher. In this scenario, the dollar and peso would rise against all of the major currencies with the biggest losers being the Japanese yen, Swiss franc and to some degree the euro. However she would need to win by an uncontestably wide margin and Trump would need to accept defeat, which he has suggested he will not do.
The third scenario is the most likely. If Trump or Clinton becomes president by a very narrow margin and the loser refuses to accept defeat, the ongoing uncertainty would be extremely negative for the U.S. dollar, especially in the hours after the election. On a percentage basis, the greatest market volatility in financial assets (currencies, equities and commodities) will be in scenarios 1 and 2.
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ECB stands ready to intervene in an emergency says Nowotny
Nowotny isn't happy with the US election result
Very strange comments from Nowotny, supposedly an independent central banker standing outside the political realm.
Odds for rate hike by the Federal Reserve next month top 80%
U.S., European government bond yields at multi-month highs on higher inflation expectations
IEA warns oil market risks running another surplus in 2017 without an output cut from OPEC
Copper rallies 4.5% amid expectations for increased infrastructure spending under Trump