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Fear Of US Election And Few Economics To Fuel Market Volatility

Uncertainty surrounding 2016 US Presidential election was on the top of the market-movers during last week. As the FBI news of investigating past-issues concerning Hillary Clinton gave rise to chances of Republican candidate Donald Trump winning the election, the US Dollar traders remained too disappointed. Fear of Trump victory was too fierce that upbeat Job figures couldn't soothe the pain of the greenback and dragged it for weekly loss. On the other hand, the EUR gained a bit on counter-strength while the GBP rallied heavily as UK High court's decision to have parliamentary approval before kicking Article 50 gave rise to speculations of no harsh Brexit and the BoE's indication of no further rate-cuts in 2016 provided additional strength to the UK currency. Further, the JPY and Gold continued being investors' favorite while AUD and NZD also gained on positive news/events from AU and New-Zealand economy; though, CAD had to dip on plunging Crude prices after the increasing US stockpile and no clear indication for production-freeze accord ahead of OPEC meeting kept on signaling broad supply-glut.

Moving on, Tuesday becomes the crucial-day for market players as US citizens would go for vote in order to decide their next President and the same would be a high alert event to fuel volatility. Other than the election, Chinese Trade Balance and Inflation, UK Manufacturing Production and the US Prelim UoM Consumer Sentiment, together with the RBNZ monetary policy meeting, are some economics to track for traders.

USD Traders, Stay Alert For Election Results!

Given the United State's scheduled fifty-eighth Presidential election voting on Tuesday, November 8, 2016, investors are locking their eyes to screens in search of what could happen after the once in a four-year election result come alive. Even if the Hillary Clinton has been a public favorite, chances of the Donald Trump victory are also high and can't be negated, which in-turn makes the election outcome more uncertain and threatening due to contrasting views of both these candidates.

The Democratic nominee Hillary Clinton is again ahead of her Republican counterpart after the FBI announced on Monday that she didn't commit a crime in her handling of e-mails as secretary of state and pleased USD traders. However, her lead is just of 5.2% than that of Donald Trump, who promises to overhaul the economy in search of better results. While Hillary has more of the women support and is perceived to be a good politician that could help the economy grow further without damaging its present flow, Mr. Trump is a successful entrepreneur and is also known for his bold efforts.

Both these nominees have quite a different outlook as Hillary is more interested in creating jobs with present economic set-up, except few changes in taxes, while Trump would like to challenge the old structure and announce new tax, trade, energy and regulatory policies. Further, Mr. Trump seems also against China and some Asian countries that are delivering low-cost products as he conveyed his wish to impose tariffs of up to 45% on Chinese imports and label China. Moreover, Trump has also been loud-mouthed while saying that he would scrap the North American Free Trade Agreement (NAFTA) if elected, which in-turn would negatively affect the CAD and Mexican Peso the most.

In addition to the election outcome, Thursday's US Jobless Claims and Friday's Prelim UoM Consumer Sentiment are some of the economics to track for the US currency traders. While Jobless Claims are likely to print fresh three-month high of 267K versus 265K prior, the Consumer sentiment gauge might reveal upbeat figure of 87.4 against previously revised 87.2.

To sum up, the US election result is likely to trigger extreme market volatility and should be given high attention while the following economics might also provide intermediate moves for the greenback traders.

If Hillary Clinton wins, it seems a USD positive outcome and can be seen in EURUSD decline towards 1.0930 and 1.0850 supports while opening the door for December rate-hike and further downside of the pair. However, Trump victory is likely to trigger an immediate market dip with a longer-term weakness of the greenback fueling the EURUSD towards 1.1250 and the 1.1330.

RBNZ & Chinese Figures: The Second-Tier To Observe

Although US Presidential election continues to acquire center of market attention, monetary policy meeting by the Reserve Bank of New- Zealand (RBNZ), together with the Chinese Trade Balance and Inflation details, are some second-tier releases that may keep trading alive.

Tuesday's Chinese Trade Balance, followed by Wednesday's Inflation releases from the world's largest industrial player, become even more important as recent figures from China have been upbeat but the Chinese central-bank isn't refraining from its Yuan reference rate-cut. The Trade Balance is likely to reverse its previous pessimism with an increase in surplus to 366B versus 278B prior while the CPI and the PPI are also expected to please commodity frontiers with 2.1% and 0.9% respective figures against 1.9% and 0.1% earlier outcomes. With both these crucial releases likely portraying Chinese strength, the AUDUSD could run-up towards 0.7730 important resistance while alternative results can again fetch the quote to 0.7580-70 support-zone.

The RBNZ, during late-Wednesday, is less likely to alter its present monetary policy. However, the monetary policy outcome will be followed by Governor's press conference that might provide additional fuel into the present up-move of the New-Zealand Dollar (NZD) as the central-bank leader recently signaled few chances of additional rate-cuts and likeliness of tighter monetary policy. Hence, an upbeat outcome of the meeting can continue helping the NZDUSD towards aiming 0.7500 mark while a disappointment might have lesser downside than 0.7220 – 0.7200 region.

UK Manufacturing Production & Trade Balance Are At Last Place

With recent upbeat economics and High Court announcement, the GBP traders have been merrily enjoying the currency's rally; however, Tuesday's Manufacturing Production and the monthly Trade Balance outcome, up for Wednesday, are expected figures that could help fine-tune the UK currency's near-term move. The Manufacturing Production growth bears the optimistic forecast of printing five-month high figure of 0.5% versus 0.2% prior while the Trade surplus is also expected to please GBP traders with -11.3B mark compared to -12.1B previous reading. Given the present optimism at UK, coupled with upbeat forecasts of scheduled economics, the GBPUSD might extend its latest up-move towards 1.2600 and the 1.2710 resistances with 1.2250 and the 1.2160 acting as nearby supports to observe.

Cheers and Safe Trading,

Anil Panchal

Tuesday, 08 Nov, 2016 / 9:57

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