Dollar strength surged in FX markets today with as investors anticipate the outcome of the US Presidential election tomorrow. The EurUsd slid 85 pips to the downside trading at the mid 1.26 level, while the UsdJpy rallied 70 pips to the low range of 99. The GbpUsd fell 321pips to the mid 1.57 price area as Traders await the rate decision by the BoE. Equity markets were flat in the US, which is standard before a major political event, we should probably see a strong reaction following tomorrow’s results.

European stock indexes saw a modest move to the upside, with the FTSE higher by 1.5% and the CAC higher by 1.17%. Bond yields were tighter in shorter duration securities like the 2yr, and a lighter drop in the latter end of the curve. Commodities were marginally higher with oil at $64bbl and gold at $726oz, neither of which are significant moves and we should be more conscious of price patterns in tomorrows’ session.

Eurozone PMI fell to 41.1 vs. 41.3 confirming the trend of slowing global growth, investors would need to see a level above 50 to infer that a recovery is on the horizon. This data was released ahead of the scheduled monetary policy meeting, in which the ECB is expected to cut rates 50bps. In the UK, manufacturing PMI rose slightly to 41.5, which is better than estimates, but with projections so low it really did not have positive impact on the sterling. The key focus will be the BoE monetary policy meeting, which is also scheduled for this week, where the central bank is expected to cut rates at least 50bps to 4.00%.

ACM Forex
Advanced Currency Markets