Good morning,

FBI off…

Needless to say with a little over 24hrs until the polls open on Election Day in the United States it is the dollar that is in focus and those watching it are seeing a nice run of strength through the Asian and into today’s European session.

The news that the FBI has no recommendations for criminal proceedings against Hillary Clinton over her emails following the latest secondary investigation has buoyed markets and seen haven currencies pushed to the side-lines. Electoral forecasters had brought in their thoughts of a Trump win to as much as 35-40% in the past week following the announcement of a 2nd investigation and are now repricing in further gains for Clinton in the Electoral College.

We still maintain that her grip on the Electoral College – states having a certain weight of voters that a candidate receives in a bid to win a majority – makes her the overwhelming favourite. The crucial thing now is, if you believe that Clinton wins, what the reaction from Trump will be. At the 3rd debate he told the world that he may not recognise the legitimacy of the result and should he make those calls, tied in with his message of ‘the system is corrupt and this is how they in Washington keep you down’ then the chances of disturbance and unrest on the streets rises dramatically.

…but damage done

Trump has countered the FBI’s decision by saying that it is impossible that they could have read 650,000 emails in a week but that argument seems to be falling on deaf ears. It is also up for debate as to how much this can help Clinton; 40 million people are said to have cast their vote already with many doing so under the belief that Hillary Clinton was under investigation. Of course there are enough voters to swing it to her but will some people now be wishing they had voted differently?

Dollar higher with risk for now

Dollar has made most of its gains against the havens from this election (EUR, CHF and JPY) with riskier currencies like the Mexican peso flying higher. GBP has also managed to eke out some gains against the greenback and is currently close to its highest level in about 5 weeks.

Some dollar weakness was seen on Friday afternoon as traders shifted funds elsewhere ahead of weekend of political news. There was little reaction to the latest US jobs report but certainly there has been no need to move expectations of a December rate hike by the Federal Reserve. The numbers within the report that got the most attention were a 2.8% increase in wages on the year – the highest since June 2009 – and an increase in participation in the labour market. More people working getting paid more will lead to inflation and the Fed knows that.

May not getting much luck in Delhi

Brexit news has been quiet over the weekend and Theresa May is in India to talk trade and immigration. Unfortunately India’s High Commissioner has warned that to get a trade deal the UK is going to have to let in more Indians, not fewer. Fallout from the court decision to allow parliament a vote on the imposition of Article 50 has also kept going with Nigel Farage planning a march on Westminster to advocate a ‘hard Brexit’ as soon as possible. Brexit news will continue its influence on the pound but will be kept off the front page by issues stateside for the majority of this week.


Today’s data calendar is quiet and would be largely ignored if it wasn’t.

Have a great day.

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