The market is expecting high volatility this week as the U.S election takes place on Tuesday, 8th November 2016.
Analysts have forecasted that a Trump victory would be detrimental to the Global markets. For a start, the Mexican Peso would be hit the hardest due to Trump’s trade policies and fears that he could trigger a global trade war. The U.S stock market is also forecasted to be negatively impacted. On the other hand, if Hillary wins the election, the markets is expected to have a slightly positive reaction. It is evident that the market is in favor of Hillary in terms of growth in the U.S economy. However, although Hillary is currently in the lead, the market remains skeptical due to the Brexit aftermath.
Last week’s non-farm Payrolls climbed by 161,000 in October versus 175, 000 jobs expected. The jobless rate fell to 4.9 percent, while wages rose from a year earlier by the most since June 2009. Overall, the figures are considered good enough to keep the Fed on track to raise interest rates next month in December.
The British pound extended gains last week after a court ruling that the government must hold a vote in Parliament before starting the two-year countdown to the nation’s exit from the European Union. The Sterling strengthened when BOE governor Mark Carney and the rest of the Monetary Policy Committee unanimously voted to leave interest rates and asset purchase-settings unchanged. In a statement, he said:
“Monetary policy can respond in either direction to changes to the economic outlook as they unfold to ensure a sustainable return of inflation to the target.”
Our Picks
GBP/AUD – Buy at support 1.6100. Sterling is expected to bounce off support in retracement mode.
EUR/USD – Remains bounded by downtrend and key level 1.1100. Potential short at current market price.
EUR/JPY – Potential short at break of support and trend line: 112.40
Top News This Week (GMT+8 time zone)
New Zealand: Official Cash Rate. Thursday 10th November, 4.00am.
We expect figures to come in at 1.75% (previous figure was 2.00%).
US: Unemployment Claims. Thursday 10th November, 9.30pm.
We expect figures to remain unchanged at 265K (previous figure was 265K).
US: Prelim UoM Consumer Sentiment. Friday 11th November, 11pm.
We expect figures to come in at 87.4 (previous figure was 87.2 revised from 87.9)
Fullerton Markets Research Team
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