Mike Paterson’s Daily Forex Brief
President Obama has been re-elected for a second attempt to deliver growth and jobs in the world’s largest economy and markets have given an initial thumbs-down with US Treasury Bond yields getting slapped and the greenback coming under pressure across the board.
EURUSD has been up to 1.2877, GBPUSD to 1.6044 and AUDUSD to 1.0481 in the immediate reaction but in the last hour or so we’ve seen treasury yields level out and traders have been quick to lock in some profit.
It seems like US voters have gone with a “ better the devil you know” verdict in a contest that cost over $2 billion, the most expensive election campaign any democracy has even seen, and in the end saw Obama run out a comfortable winner with some results still to come in. Quite what it means in real terms will have analysts and traders pondering for a while yet but in the current environment where the memory of a goldfish prevails it will soon pass.
Effectively nothing has changed. Obama is back in the White House but the Republicans still hold control in the House of Representatives and its little wonder that the President handed out a large olive branch in his post-match rhetoric.
Where we go from here is still a coin-flip. Yep, the US has huge problems, the so called “fiscal cliff” of uncertainty, but then the whole global scene is awash with issues of its own so we shouldn’t be casting stones just yet. And in any case, a decent improvement in the US will mean a growth in confidence elsewhere and hence the risk-on sentiment may yet still have the greenback on the back foot as other currencies find favour.
As I type EURUSD is back down to 1.2835 and GBPUSD at 1.6005 with EURGBP mid-range at 0.8018 (1.2472) having been back up to 0.8032 (1.2450) in the Euro’s initial surge for the tape.
This morning we have Eurozone Retail Sales and German Industrial Production but little else to feed off until Australian Unemployment tonight so we can expect a scrappy day ahead.
Scrappy or not the mighty Shrimpers last night got back to winning ways but the outlook for Man City is looking bleak as they could only manage a draw after handing a two goal lead to Ajax.
Of more concern to this writer is the news that current world champion Ronnie O’Sullivan has pulled out of the rest of the 2012-13 snooker season citing “personal issues” and may quit the game for good.. Ok, so he’s mouthed off before on more than one occasion but with little left to prove to himself or the game he has no further reason to play lip-service to a sport that Barry Hearn now has operating on a 50 week/27 tournament year.
With cricket now also on a year-round grab at the pockets of over-extended punters surely it’s time to look at a sensible compromise? Just saying………….
Interbank Rates at 08:38 BST
Today’s Data: BST
10.00-EU – Eurozone Retail Sales
11.00-EU – German Industrial Production
00.30-AU – Australian Unemployment Rate
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Mike ‘Oscar’ Paterson has been in the Forex trenches for nearly three decades working as a senior Spot trader in London at UBS, Chief Dealer FX at the State Bank of Victoria and in charge of Spot CHF at Credit Suisse with a daily turnover in excess of $1.5 billion. Mike now works as an independent consultant providing a fully bespoke service to the corporate and private sectors in physical FX delivery as well as guiding those who wish to improve their currency trading. Mike also presents seminars and workshops and writes for a number of publications.
To contact Mike please call +0044 (0) 1732 700383 or email firstname.lastname@example.org
The views expressed above are those of the author and should not be taken as investment advice. MSP Foreign Exchange Services will have no liability for, or to, any persons executing trades based on the content above.