A tentative USD recovery is in the making, emanating from the Clinton’s vindication in the email scandal case reopened by the FBI 10 days ago. The news saw the USD gapping on the Asia open, and but hesitant gains may be justified given the relatively tight race reflected in the polls.
USD/JPY was the primary gainer in the overnight session, trading up into the mid 104.00’s from 103.80 or so. The recent highs seen in the mid 105.00’s are expected to cap ahead of the elections, while USD/CHF and EUR/CHF have much catching up to do if a Clinton win is as anticipated as some of the currency pairings have suggested.
The USD rate recovered 1 CHF, but the EUR cross rate is back under 1.0800 again. In this respect, dealers reported the strong AUD/USD buying (eventually) through 0.7700 as purely election based, but strong offers seen through to 0.7750 which could be a tough ask under the circumstances.
NZD/USD is stuttering a little through .7300, but with the prospect of a rate cut from the RBNZ on Wednesday, fresh demand here is likely to require a modest pullback ahead this. Onto GBP, and the post High Court euphoria over Article 50 is well and truly over, as condemnation gathers pace through various media to dampen expectations that a soft Brexit is a certainty from here.
Cable sellers in the mid 1.2500’s may have set a near term top, but we are seeing buyers coming in from 1.2375, with plenty more of note in the 1.2325-50 area from here.It is a little more mixed in EUR/GBP, with .8850-.8950 limits holding for now. USD/CAD is also now range bound, and at lower levels as the risk impact has given oil prices some support and pressured the spot rate as a result. MXN has also come back, though clearly more so on Trump’s momentum diminishing.