Intraday Market Thoughts

Dollar Pares Post-Obama Victory Losses

by Patrik Urban
Nov 7, 2012 12:31

USD stabilises after intitial pullback following Obama victory, Fiscal cliff negotiations between democratic senate and republican house set to begin; Eurozone retail sales and German industrial production disappoint; German advisors see GDP at 0.8%. Up ahead is Draghi's speech and by the end of the session NZ labor market data. Direct access to last nights Premium Insights trades on EURUSD, USDJPY, GBPUSD, EURJPY, EURGBP, CADJPY, AUDUSD, gold, silver and oil is found below, as well as the technical and fundamental arguments for why Ashraf is sticking with his 1.35 target for EURUSD.

The buck started to lose ground across the board, except JPY, during the Asian session as polls began to point to president's Obama victory. USD selling intensified further after president Obama reached the necessary electoral college count. Democrats increased their hold of the Senate while republicans will continue to control the House of representatives. Difficult and prolonged fiscal cliff negotiations are set to begin.

With the US election out of the way, markets can start to focus again on fundamentals. Eurozone retail sales disappointed as they declined 0.2% in September from previous 0.2% growth and German industrial production dropped 1.8% in September from previous -0.5%. EURUSD trades about 70 pips below session highs around 1.2800.

The German government's council of economic advisors expects GDP to rise 0.8% both in 2012 and 2013 while the unemployment rate is seen ticking up to 6.9% from 6.8%. The council assumes that the ECB will cut rates to 0.5% before the end of the year and they see EURUSD at 1.27 until the end of 2013.

ECB president Draghi is scheduled to speak on the economy shortly after 8:10 am ET, perhaps providing some clues for the ECB's Thursday decision.

There are no top tier fundamental releases due during the US session. However, markets could respond to crude oil inventories at 10:30 am and to 10 year bond auction at 1:00 pm. By the end of the session at 4:45 pm NZD is likely to experience heightened volatility as New Zealand's statistics office will publish the latest labor market data. Employment is seen rising 0.3% in Q3 from previous -0.1% while the unemployment rate is expected to tick down to 6.7% from 6.8%.

Here are the Premium Insights trades on EURUSD, USDJPY, GBPUSD, EURJPY, EURGBP, CADJPY, AUDUSD, gold, silver and oil. DIRECT ACCCESS Nonsubscribers can click here to join


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