Bullet Report: Hilary Clinton to the rescue of the Markets

Posted On 27 Sep 2016

Today’s calendar features US PMI for September, an index which has forecasted correctly the GDP for the US the past 3 quarters. Yesterday’s market action was dominated in anticipation for the first presidential debate between Donald Trump and Hilary Clinton. Although polls show now a tie, markets are convinced that Hilary won the debate, as can be seen from the drop of the USD/MXP (Mexican Peso) and the rebound in stock markets. The next two debates are due to take place on 9 October and 19 October.

Currencies: The debate last night has set the tone in currency markets. Assuming that Hilary won the debate, JPY weakened versus the USD, as stock markets rebounded, a 1.7% drop was also noticeable in the USD/MXN which indicated that Donald Trump did not do so well. The MXN has dropped since Donald Trump announced his presidential candidacy as there were concerns that his massive deportations of Mexican immigrants would hurt Mexico’s economy. Against a basket of currencies, the dollar was a fraction firmer at 96.360 (DXY) and the euro was steady at $1.1242. Most interestingly USDJPY almost broke the 100.00 support level, but renewed speculation about Central Bank Intervention and an equity rally, helped the pair bounce to 100.90.

Stocks: After a sharp day of losses in Wall Street and Europe which saw the DAX (-2.19%) FTSE UK (-1.32%) and SP500 (-0.86%) and DOW (-0.91%), Asian stocks rebounded as investors were pleased over the first Presidential Debate. Nikkei closed +0.84% and today since the European Opening DAX is trading higher as 0.7%, identical to other European Bourses.

Oil and Gold: Oil bounced from $44.45 yesterday to as high as $46.19 as the world’s largest producers gathered in Algeria to discuss ways to tackle a crude glut that has battered prices for two years’ now. GOLD is still trading within a tight range of $1332 and $1340, with the yellow metal appearing slightly bearish.

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