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Hope you all had a good weekend.
If you thought Brexit was all about lies and deceit welcome to US election politics. What a dirty ugly campaign we are witnessing. Regardless of your vote, what the FBI pulled last week was properly dirty. Totally unnecessary and the timing could not have been more arrogantly obvious. After Ms Clinton appeared to be running away with the gong, the FBI and their Director (who happens to be a Republican and Trump supporter) decided to “re-open” the can of worms. Been there done that. Ms Clinton has already dealt with her emails, none of which were deemed to be a national security risk. So it is not hard to see why the FBI decided to launch this new round of email investigation? Was it in order to make the playing field a little more interesting with just a week to go? As far as I am concerned nothing has changed and there is nothing new (not that I have read the 650k emails) to derail who I believe should be next President of the United States.
On Friday the US commerce Department announced that the US economy expanded at an annualised 2.90% in Q3, the fastest in 2 years. I am jealous, as those were the numbers the UK were at pre 23/06. Alas that’s gone up in smoke. Anyway, if you were not aware, tomorrow and Wednesday the FED are meeting to decide on monetary policy. I am cautiously optimistic that the FED will stand down and do nothing with only 6 days to go to elections. While the FED are of course independent and do what they please, I do not think they would ever play into the politicians hands and rock the boat by changing interest rates (monetary policy) and make comments aimed at derailing either of the candidates. So come Wednesday eve, I think the Pres of the FED will choose her words carefully citing December as the next possible date to decide. As you have read previously, I still think there is a good chance the FED will hike 0.50% and by doing so set the tone for the USD and US economy going into 2017. It is a gamble, but what a statement they would make if they did. The US economy is vibrant and cooking on all cylinders. We are open for business. Granted data between now and then must continue to shine.
Friday saw the USD sell off following the revelation by the FBI but has since recovered somewhat to trade at EURUSD 1.0950 and GBPUSD 1.2180 at the time of writing. What is pretty certain amongst traders and investors is a Clinton win will provide more clarity and security with regard to national interests, foreign policy and trade negotiations. The clear uncertainty that will prevail should Mr Trump win is simply too much to bear. Can you imagine for a moment Ivanka and Donald Jnr running around the White House carrying “The Football” (for those of you who are unaware I am not referring to an oval ball used in the NFL). If you thought Brexit was a mess, my gosh a Trump win will send financial markets into a tail spin. I just cannot bear to think of that.
Reports over the weekend that the Governor of the BoE could step down and return to Canada. First of all that would be a major catastrophe and one which would send the GBP into freefall. If you read the story in the Daily Mail and viewed the comments I was utterly mortified and horrified by the sheer hate by the majority of the 4k or so comments. Right wing nutters who know practically zero about what it takes to be a Central Banker or more importantly how to manage monetary and fiscal policy of an economy the size of the UK. It worries me just how ignorant and deluded so many people are and these are the same people that voted Brexit. Honestly it is simply shameful.
For the coming week I think the USD will probably trade sideways as the FED announce their decision on Wednesday and the debates for Clinton and Trump continue at full force. As far as the GBP is concerned, my views do not change…small recovery followed by stronger sell offs taking us overall to lower big figures.
Have a great week ahead
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