The US dollar continued to advance against its peers as US stock markets closed higher again on the eve of the elections. Markets seem hopeful that Clinton will emerge victorious, as this scenario would mean less uncertainty for the economy, although the poll leads suggest that it’s still too close to call. There are no major reports due from the US economy today so all the focus would be on the outcome of the elections.
The euro was mostly weaker against its peers even though data from the euro zone came in stronger than expected. The Sentix investor confidence index was up from 8.5 to 13.1, higher than the projected climb to 8.7, while retail sales fell by only 0.2% versus the estimated 0.3% drop. German industrial production and trade balance data are lined up today but traders could be more sensitive to market sentiment leading up to the US elections.
The pound gave up a bit of ground as traders probably booked profits after the reaction to the British High Court ruling last week. UK Halifax HPI posted a 1.4% rise in prices versus the estimated 0.3% uptick, keeping upside price pressures in play. UK manufacturing and industrial production numbers are due today and disappointing results could remind traders of the Brexit-related uncertainties that are prevailing.
The franc advanced against most of its currency counterparts, prompting a bit of jawboning from SNB officials. In a TV interview, a policymaker said that they are watching CHF flows closely in relation to US election market movements and that they would not hesitate to intervene if necessary. SNB foreign currency reserves ticked slightly higher from 628B CHF to 630B CHF while CPI was weaker than expected at 0.1% versus 0.2%.
The Japanese yen wasn’t able to keep up with dollar strength but it advanced slightly against its other peers, possibly on profit-taking ahead of the US elections. Only the Japanese leading indicators is due today and a small dip is eyed, although risk sentiment might remain the bigger driver of yen price action for the rest of the day.
Commodity Currencies (AUD, NZD, CAD)
The comdolls were able to take advantage of the pickup in risk-taking, spurred by strong gains in US stock markets. There were no major reports out of the comdoll economies yesterday. Today’s Chinese trade balance release featured weaker than expected results, as the surplus widened from 278B CNY to 325B CNY, short of the estimated 366B CNY figure. Exports were down 7.3% while imports lagged 1.4%.