Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


US election result to have greatest impact on currency

11.06 AEDT, Wednesday 7 November 2012

US election result to have greatest impact on currency and commodity markets

By Ric Spooner (Chief Market Analyst, CMC Markets)

Last night’s price action gave an insight into the likelihood that the biggest market impact from an Obama victory will be in the US dollar and commodities.

Currency traders will also be focussed on the passage of budget legislation through the Greek Parliament this week. However, assuming this happens, an Obama victory leaves the way open for near term weakness in the US dollar and consequently stronger commodity markets. Precious metals in particular may benefit from this scenario and it appears markets are now positioning for an Obama victory.

An Obama victory makes it highly likely that Mr Bernanke will be replaced by a likeminded Fed Governor when his term expires in 2014. This means continued expansionary monetary policy into 2014 and beyond if required. This is a potentially bearish scenario for the US Dollar and bullish for gold.

At the same time, concerns over resolution of the fiscal cliff may also be bearish for the US Dollar. In the near term, these concerns are likely to be heightened if Mr Obama is returned as President but the Republicans retain control of Congress.

Historically, the election result has not usually led to major stock market moves. This is partly because the market often has a clear view of who is favourite prior the election. In this case, although the result is more uncertain it is not so clear which candidate will produce the best result for the overall market and economy. The healthcare and defence sectors will respond positively to a Romney victory. However, the overall market is likely to remain cautious until the fiscal cliff problem is satisfactorily resolved.


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Equity Crowd Funding Carries Risks, High Failure Rate

Equity crowd funding, which became legal in New Zealand this month, comes with a high risk of failure based on figures showing existing forays into social capital have a success rate of less than 50 percent, one new entrant says. More>>

ALSO:

Scoop Business: NZ Migration Rises To 11-Year High In March

The country gained a seasonally adjusted 3,800 net new migrants in March, the most since February 2003, said Statistics New Zealand. A net 400 people left for Australia in March, down from 600 in February, according to seasonally adjusted figures. More>>

ALSO:

Hugh Pavletich: New Zealand’s Bubble Economy Is Vulnerable

The recent Forbes e-edition article by Jesse Colombo assesses the New Zealand economy “ 12 Reasons Why New Zealand's Economic Bubble Will End In Disaster ”, seems to have created quite a stir, creating extensive media coverage in New Zealand. More>>

ALSO:

Thursday Market Close: Genesis Debut Sparks Energy Rally

New Zealand stock rose after shares in the partially privatised Genesis Energy soared as much as 18 percent in its debut listing on the NZX, buoying other listed energy companies in the process. Meridian Energy, MightyRiverPower, Contact Energy and TrustPower paced gains. More>>

ALSO:

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Houses (& Tobacco) Lead Inflation: CPI Up 0.3% In March Quarter

The consumers price index (CPI) rose 0.3 percent in the March 2014 quarter, Statistics New Zealand said today. Higher tobacco and housing prices were partly countered by seasonally cheaper international air fares, vegetables, and package holidays. More>>

ALSO:

Notoriously Reliable Predictions: Budget To Show Rise In Full-Time Income To 2018: English

This year’s Budget will forecast wage increases through to 2018 amounting to a $10,500 a year increase in average full time earnings over six years to $62,200 a year, says Finance Minister Bill English in a speech urging voters not to “put all of this at risk” by changing the government. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news