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As we have mentioned at the start of last week, the last 7 campaign days or even 72 hours can decide the result of an election. We have certainly seen the FBI’s investigation into a batch of emails concerning Democratic Candidate Hillary Clinton gripping markets at the start of last week. With less than 72 hours to go before the polls close, the FBI had just dished a “no criminal wrongdoing” conclusion, sending some ripples through markets once again.
The USD index was up by more than 300 pips this morning upon the announcement of FBI director James Comey. Prices was hovering on either side of 97.00 level last week after October’s non-farm payrolls data turned out largely as a non-event. The highly sensitive USD/JPY pair shot up from $101.00 levels, up above $104.00, when last checked. Eye further upward potential towards the $105.00 figure with near-term support at the 100DMA of $102.83.
With the strong dollar coming in, pressure also returns for emerging Asian market currencies. This will be an increased upward push for USD/MYR and USD/IDR pairs, which had already rallied recently on sliding crude oil prices. Notably, concerns over politics have not been limited to the west as we saw protests in both South Korea and Hong Kong over the weekend. Nevertheless, the markets appear to remain unscathed with the KOSPI gapping higher the open, lifted by the news from the US end.
Ahead of the week’s open, we also saw a surge in S&P 500 futures, which jumped by more than 20.0 points, likely to end the downward slide in S&P 500 at the start of the week. The S&P 500 index had declined for 9 consecutive sessions as of last Friday, down 1.94% in the week.
Asian equities meanwhile have already taken the hint with early movers including the Nikkei and KOSPI in black at the open. We are nevertheless two days from the highly anticipated result release for the US elections and the optimism may be a temporary fixture with jitters still lurking in the markets.
Meanwhile for commodities, one would zoom in to gold to find that prices had dipped approximately 1.0% this morning, trading below the 50DMA of $1297.40. Risk appetite was lifted at the start of the week with the FBI conclusion favouring confidence in Democratic candidate Hillary Clinton, although gold could still be the safe haven of choice with the countdown to the US elections.
Friday: S&P 500 -0.17%; DJIA -0.24%; DAX -0.65%; FTSE -1.43%