- It’s all about the US Presidential Election, folks.
As pet owners of the UK heave a sigh of relief that fireworks night is over, the world focuses on the next few days of US electioneering and voting. With the FBI backing off as far as Hilary’s emails are concerned, the game is back on and so much hangs in the balance. Undoubtedly the next few days in the financial markets will be dominated by events across America.
No one can call the outcome of the election but we do know for absolute certain that this will be a volatile few days. We also know that the outcome of the election will set the direction of travel for the US Dollar and, by association, a whole heap of other currencies as well.
The generally agreed view is that a win for Donald Trump will weaken the US Dollar. His policies are as clear as orange juice but the headlines suggest he is protectionist and would threaten US trade relations with …well almost everywhere. So, in the early hours of Wednesday morning (between 4am and 5am UK time), if the suggestion is that the Trump campaign is ahead, we will see a sharp depreciation in the value of the US Dollar. That would strengthen the Euro, probably more than the Pound, and hence, the GBP-EUR exchange rate would most likely fall. Clearly, the opposite is also true; any suggestion that Clinton is ahead would strengthen the already buoyant US Dollar and we would see swings in the other direction in the GBP-EUR.
There is other news coming to us this week. It includes inflation data from Germany and elsewhere, Eurozone retail sales numbers, construction data from the US and industrial and manufacturing data from the UK. We will even get Chinese trade figures and inflation data and these are usually cause for volatility, but no one will care too much unless the numbers are remarkably different to the market forecasts.
Nope, this is a week in which the whole world will hold its breath until Wednesday morning, because big change is looming on the horizon – and that might not be a good thing.
So, what can be done? Well, protection against this kind of negative possibility is reasonably straightforward. The use of Stop Loss orders can give you a safety net to protect against the worst rigours of these sorts of trading conditions. There are also opportunities to take advantage of spikes in exchange rates through Limit Orders. These are placed at advantageous levels to capture positive market movements, even if you and I are fast asleep (separately, of course. No impropriety here). These 24/7 orders have been the source of terrific gains in the recent market volatility and this week is set to be one of the most volatile.
If you would like to discuss how to make the most of and protect against market volatility throughout this week, call in and speak with your Currency Consultant.
Lastly, with all the furore over the new UK £5 notes and the silly money being paid for the ones with low serial numbers, one guy thought he had a real winner. His fiver had a serial number starting with AK47. Thinking everyone would want a £5 note with a Kalashnikov model designation on it (why?) he put it on eBay. Sadly, he forgot to put a reserve or starting price and it sold for £3.20. ooops.
A farm hand walks down to the pond at the end of his land near the Florida Everglades. He has a large bucket to collect some water to wash off the seat on his tractor. As he approaches the water, he looks down the hill to see four young women skinny-dipping in the pond. He is pleasantly surprised to see that they are all in the buff.
The only woman facing him shrieks and says ‘look away, look away’. There are shrieks and screams from the others as hands and arms are hurriedly placed to preserve a little modesty.
‘Okay,’ calls the farm hand. ‘You know you are in my boss’s pond though. Didn’t you see the ‘Keep Out’ signs?’
‘Yes, yes, OK, but we were just having a quick dip,’ says the woman. ‘You go away and we will get out, we’ll get dressed and we’ll leave.’
‘That’s fine,’ says the farm hand. ‘I’m not here to spy on you but you are in my way.’ With that he sat high on the bank and put the bucket down before continuing with, ‘I’m just bringing the alligator his breakfast.’
Today's Major Economic Releases
||EU: Retail Purchasing Managers' Index
||EU: Sentix Investor Confidence
||EU: Retail Sales month-on-month
||US: Labor Market Conditions Index
||US: Consumer Credit month-on-month
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Daily Currency Analysis by David Johnson
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