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Calm Before the Storm as the US Heads to the Polls

Published November 8, 2016
  • Prices across assets are relatively calm this morning as voting gets underway in the US Presidential election
  • USDCAD is flat to yesterday's closing levels and looks comfortable in the mid 1.33's
  • Oil is 0.5% lower to $44.67 for WTI this morning, after a nice relief rally yesterday of over 80 cents following a 6% plunge last week
  • Yesterday saw the largest rally in US equities since March as markets cheered Clinton's improving prospects following the closure of the FBI investigation into her email practices
  • A Clinton administration represents continuity of policy, especially on trade, foreign policy and immigration
  • Trump's stance on those issues has unnerved markets as he essentially embodies the concept of 'fear of the unknown’ – would he actually dissolve NAFTA?
  •  Trump's controversial rhetoric has made many of the down ballot Congressional races all the more interesting…
  • …the Republicans control the Senate 54-46 at present but if the Democrats can make inroads in some key races and take a slim majority this would solidify Clinton's legitimacy and make governing that much easier in the early going 
  • The House is expected to remain in control of the Republicans as they have a larger 234-201 lead
  • Canada reported that Housing starts rose by 192.9k units last month, slightly less than the 195k expected
  • Canada building permits are next up at 830am ET, but again, little impact is anticipated on USDCAD as markets are tautly drawn and eagerly anticipating the election results later this evening
  • A volatile reaction is not out of question and thus if you do have upcoming exposures plan as best you can!

Charts: (1) USDCAD. (2) Fed rate hike odds. (3) Economic Calendar.