Clinton vs Trump Outcome to Shape Market-Wide Sentiment

2016-11-08 07:13:00

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