Although the markets are preparing for tomorrow’s elections, today’s focus will the all the Germany and EU data releases including Retail Sales and consumer confidence. After the weekend, which saw the stocks markets close at monthly lows and the USD sold off, the picture was reversed following news that the FBI has cleared Clinton in any wrongdoing over an extra batch of emails that left from her personal server. Friday also saw the release of solid NFP data, which further strengthen the case for a December rate hike.
Currencies: The Dollar opened the week on a strong foot after the FBI found that there is no further evidence against Clinton regarding the handling the emails case. Last week the USD was under a lot of pressure as Clinton lost the lead in some states following the above scandal, as markets assume that a Trump Presidency will be unpredictable and bottom line negative for the US economy. Fridays payrolls report showed the gain of 161k new jobs but more importantly a record growth in wage earnings, something that will likely push inflation higher in the next month’s justifying a rate increase in December. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, jumped 0.51% to 97.43. Investors are currently pricing in a 66.8% chance of a rate hike at the Fed’s December meeting. A Possible Trump win would most likely mean a weaker USD against JPY and EUR.
Stocks: Asian markets have welcomed the news that Clinton has will not be prosecuted with any charges from the FBI, with a strong rebound this morning. This morning, European indices have opened 2.2% higher, a much needed rise after last week’s selloff which saw the SP500 drop for the longest period since 2008. Clinton is seen as a candidate of the status quo and her policies are viewed as more predictable than her Republican rival, a political novice. A Possible Trump victory would likely mean a stock market selloff.
Oil and Gold: As Gold is priced in USD dollars and a barometer for safety, the metal has gained in value since Both parameters mentioned have deteriorated lately. The dollar’s drop and the heightened risk for the markets helped GOLD recover to $1300 levels after hitting $1241 on the 7th of October. This morning though, Gold dropped around $10 after the Dollar strengthened, and markets rose on a Clinton relief Rally. Oil prices rose, with traders citing opportunistic buying following sharp declines in the previous week on the back of weak fundamentals. Brent crude was trading at $46.08 per barrel, up 1.%. U.S. West Texas Intermediate (WTI) was up 1.3% at $44.63 a barrel.
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