Markets were largely sideways today with little activity of note. EUR/USD and GBP/USD consolidated last week's losses, closing at 1.2792 and 1.5980 respectively. On the Pacific front, AUD/USD and USD/JPY were also little changed, with both pairs closing within a few pips of where they were on Friday. On emerging markets, USD/MXN traded in a tight range, bouncing around between 13.02-13.05. The market is clearly looking for direction. However, as long as the fundamentals remain strong, the Peso should still have legs with which it can continue its run. USD/INR and USD/TRY were the only significant movers today. USD/INR surged overnight in Asia after a typical bout of risk aversion that traders have become accustomed to. Turkey's Lira traded higher, breaking through the 1.78 level versus USD after Fitch upgraded its sovereign debt.
The key risks events for this week are definitely the US presidential elections and the Greek parliament vote to implement its austerity plan. Stateside, markets see the race deadlocked, but abroad most actors are pricing in an Obama victory. US equities may get a slight bump if Romney pulls off an upset. However, any post-election moves ought to be transitory in nature, and given that market expectations are very hard to pin down, difficult to forecast. Finally, most objective analysts don't see the election having much impact on the fundamental growth trajectory for the US.
Progress in Europe might give the Euro a welcome rally, and would certainly help it consolidate the gains in has posted in the last three months from its July 31 low. However, this event will almost certainly be over shadowed but the aftermath of the election, so caution is advised.
No comments:
Post a Comment