‘FBI’ moving markets

A stronger dollar was seen at the start of the week while some reversal could be in sight for markets on Monday with a change in tide with respect to the US elections. 

US Trading
Source: Bloomberg

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.

 

Currencies

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.

 

Equity

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.

 

Commodity

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%

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.