It has been a choppy 12-16 hours in the FX markets, with the market ready to buy the USD on a Clinton win to the US presidency, while sellers were ready for a Trump win. Going into the vote count, pre-emptive buying went with the polls, with USD/JPY through 105.00 again, but with the Florida vote coming in, the tide turned and how. We eventually saw USD/JPY slump into the low 101.00’s, while EUR/USD pushed up to a tick shy of 1.1300.
USD/CHF slumped to a low of .9550, while the much bid AUD/USD rate was slammed back to a low of .7575, with the previous buying through .7720-50 sell orders all based on a Clinton win. Once again, the polls have misguided the market – as they did in the Brexit vote – but was have followed since is a complete turnaround in the greenback.
Stocks were nursing some heavy losses, but these have been traced in large part, but the market sentiment will need a few days to gauge the overall view of the new Republican president. Fed policy is back on the agenda, and with the odds of a Dec rate hike recovering from 50% to 65%, the turnaround in the USD has been justified. EUR/USD has now fallen through 1.1000, with 1.0900 now not too far off, while USD/JPY is back in the upper 104.00’s, but 105.00+ may require some nerve this time around.
USD/CHF has rallied back above .9800 again, but the market has turned on EUR/CHF, but this may have come through EUR/GBP selling also. The UK trade deficit has widened – the only data release of note this morning – but after hitting .9025, the cross rate has been slammed as the market has clearly run into some strong orders up here. This has been allied to strong bids into 1.2350, with plenty more down to 1.2300, while further demand anticipated into the 1.2200’s also.
Looking ahead, NZD/USD upside may be limited ahead of the RBNZ rate call, where a 25bp is now widely anticipated.Seen as a one off, the currency has priced this in for the most part, but is not as resilient as it was ahead of the US elections. CAD has been pretty well contained after spiking through 1.3500 overnight, with the dip back under 1.3350 short lived, but no fresh upside after the DoE reported a larger than expected build in crude as well as a rise in production.