The FED didn’t change the interest rate as was the general assumption and the FOMC statement made it clear that the FED is looking to raise the interest rate next month if nothing extraordinary happens. If tomorrows NFP will be more or less in line with the expectation, we can expect that the road is clear for the FED to move. However, it could also be that something unexpected happens, and if Trump would win the election, it could be that the FED will see that as something that would warrant it to hold off for now.
CurrenciesEUR/USD – the USD is continuing to weaken as also the data out of the Eurozone was better than expected. We are currently trading at the resistance around the 1.1116 level again.
USD/JPY – is still selling off and the JPY strengthens due to the increase demand for safe havens, as Trump is still doing well in the polls. We have dropped around 250 pips in just 3 days!
GBP/USD – with the USD losing strength we see the pair move further up and reached the highest level in nearly a month. We will be looking to see if the BOE will cut the interest rate, although that is not expected at this stage. Therefore, the most important will be to see the accompanying comments and the outlook of the BOE.
USD/MXN – while the USD is losing ground against almost every other currency, the MXN is the obvious exception.
IndicesDAX 30 – continued its drop and in the current pace the magical 10,000 level is approaching quite fast, especially since we are expected to open lower. Only last week we were trading at the highest level in nearly a year.
Dollar Index – was unable to benefit from the likelihood that the interest rate will move up next month as the USD is on the back foot because of the fear of a Trump Presidency. If we will see a Clinton victory we could expect a sharp USD rally, especially since we are expecting a move by the FED next month.
S&P 500 – continued to drop further, and was helped by 3 different factors. The first is the fact that Trump is still doing well in the polls and the election appears to be much closer than it appeared a week ago. Secondly the sharp drop of oil after the inventories showed a record increase. Thirdly, even though the USD didn’t benefit, the fact that the FED is on course to raise the interest rate continued the move down.
CommoditiesGold – managed to breach the 1300 level, although it dropped right after the FOMC statement showed that the FED is very likely to raise the interest rate next month. However, gold still closed higher and is trading above the 1300 still, as we can see equity markets still go down, and safe havens are performing well. This has to do everything with the fact that Trump is gaining in the polls, less than a week before the election.
Oil – saw another sharp drop as the EIA inventories showed a huge record build of well over 14 million barrels. Again we had a very large difference between the API and EIA data, this time of more than 5 million barrels. We also had yet another increase in production and this is now the third week in a row. This obviously caused oil to drop fast and hard and within minutes it dropped over $1 a barrel. We have since moved up from its low of just under the 45 level to the resistance now around the 45.80 level.