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Clinton vs Trump Outcome to Shape Market-Wide Sentiment

Clinton vs Trump Outcome to Shape Market-Wide Sentiment

2016-11-08 07:13:00
Ilya Spivak, Head Strategist, APAC
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Talking Points:

  • Commodity FX lower as Yen gains, retracing yesterday’s price action
  • Quiet consolidation likely across markets before US election outcome
  • Clinton/Trump dichotomy to be reflected in risk on/off trade dynamics

The Australian, Canadian and New Zealand Dollars pulled back while the Yen edged cautiously higher in moves that appeared corrective following yesterday’s session. Commodity bloc FX outperformed while the anti-risk Japanese unit plunged as markets cheered after the FBI affirmed that Hillary Clinton did not commit a crime in the handling of emails while serving as Secretary of State.

Markets dislike uncertainty most of all. With that in mind, it seems understandable to see risk sentiment improving along with the probability of a Clinton victory. The former First Lady and New York Senator is the “status quo” candidate. Investors seem fairly comfortable betting on the direction of US policy and allocating assets accordingly with her in the White House.

Clinton’s opponent Donald Trump is anything but the conventional option so pricing risk in the event of his victory is inherently trickier. With that in mind, it makes sense that protective traders reduced exposure to more speculative assets as polls narrowed after the FBI opted to probe Ms Clinton anew last week only to reverse course when the investigation came up empty.

These price gyrations underscore the markets’ sensitivity to the US presidential election outcome as voters head for the polls in the hours ahead. A batch of second-tier European economic data and a bit of Fed-speak will probably fade into the background as traders wait for the vote’s result before committing to a firm directional bias. In the meantime, quiet consolidation is likely to persist.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

21:00

NZD

ANZ Truckometer Heavy (MoM) (OCT)

-0.2%

-

-2.4%

22:30

AUD

ANZ Roy Morgan Weekly Consumer Conf

117.8

-

114.1

23:50

JPY

Official Reserve Assets (OCT)

$1242.8b

-

$1260.1b

0:01

GBP

BRC Sales Like-For-Like (YoY) (OCT)

1.7%

0.6%

0.4%

0:30

AUD

NAB Business Conditions (OCT)

6

-

8

0:30

AUD

NAB Business Confidence (OCT)

4

-

6

2:33

CNY

Exports (CNY) (YoY) (OCT)

-3.2%

-0.8%

-5.6%

2:33

CNY

Imports(CNY) (YoY) (OCT)

3.2%

5.0%

2.2%

2:33

CNY

Trade Balance (CNY) (OCT)

325.25b

366.61b

278.35b

2:40

CNY

Trade Balance ($) (OCT)

$49.06b

$51.70b

$41.99b

2:40

CNY

Exports ($) (YoY) (OCT)

-7.3%

-6.0%

-10.0%

2:40

CNY

Imports ($) (YoY) (OCT)

-1.4%

-1.0%

-1.9%

5:00

JPY

Leading Index CI (SEP P)

100.5

100.5

100.9

5:00

JPY

Coincident Index (SEP P)

112.1

112.1

112.0

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

6:45

CHF

Unemployment Rate (OCT)

3.2%

3.2%

Medium

6:45

CHF

Unemployment Rate SA (OCT)

3.3%

3.3%

Medium

7:00

EUR

Germany Industrial Production (MoM) (SEP)

-0.5%

2.5%

Medium

7:00

EUR

Germany Industrial Production (YoY) (SEP)

2.0%

1.9%

Medium

7:00

EUR

Germany Trade Balance (SEP)

22.4b

20.1b

Medium

7:00

EUR

Germany Current Account Balance (SEP)

24.5b

17.9b

Low

7:00

EUR

Germany Exports SA (MoM) (SEP)

-0.8%

3.4%

Low

7:00

EUR

Germany Imports SA (MoM) (SEP)

-0.2%

1.9%

Low

9:30

GBP

Industrial Production (MoM) (SEP)

0.0%

-0.4%

Medium

9:30

GBP

Industrial Production (YoY) (SEP)

0.8%

0.7%

Medium

9:30

GBP

Manufacturing Production (MoM) (SEP)

0.4%

0.2%

Medium

9:30

GBP

Manufacturing Production (YoY) (SEP)

-0.1%

0.5%

Medium

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.0837

1.0954

1.0998

1.1071

1.1115

1.1188

1.1305

GBP/USD

1.2136

1.2285

1.2341

1.2434

1.2490

1.2583

1.2732

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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