EURUSD Analysis For 7th November – Price Consolidating Around 200 Day SMA Prior To US Election
- The EUR/USD (euro/dollar) is trading in a tight consolidation range, and up marginally at a 0.16% gain on the day. This comes as voting in the US presidential election takes centre stage. A win by president Obama could signal a continuation of the dovish central bank policy measures, a Romney victory would likely see the replacement of Fed Chair Ben Bernanke. The economy is a central focus of the election.
- Market participants are unwilling to commit while this event risk is looming. Price moved under the previous sessions low, by around 5 pips, during trading in Europe before seeing a reversion to the previous intra-day range. This marked an eight-week low of 1.2763 for EUR/USD.
- The 200-day SMA continues to act as a pivot and has capped the daily high for euro/dollar at 1.2826.
- The greenback may weaken in the event of an Obama win according to this article from Bloomberg. The article also reports that Alan Ruskin, who is the global head of Group-of-10 foreign-exchange strategy for Deutsche Bank AG in New York, wrote recently that “after an initial boost, the U.S. currency would likely decline against most of its counterparts except for the yen as investors’ willingness to take risk increased with a Romney victory”.
- Polls will start to close at 18:00 EST (23:00 GMT) in eastern states. The winner may be known during the early hours of tomorrow (7th November) or even sooner.
- In related markets the Australian dollar has gained versus most of its major currency counterparts after the RBA unexpectedly held interest rates at 3.25%, the AUD/USD is trading at +0.70%. The GBP/USD currency rate is consolidating around the 1.6000 handle with a +0.16% daily gain. US Treasury notes (10-year) capped the two-day rise as yields (which move inverse to price) were up by four basis points at 1.73%. The Dollar Index, which tracks the U.S. currency versus six major counterparts, dropped 0.2 percent to 80.59 after four consecutive daily gains. The S&P500 closed up +0.8% at 1428.
Related terms: Federal Reserve, Fiscal cliff, Barack Obama, Mitt Romney, Outcome of the Presidential election.