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


Land & Water Forum: Fourth Report On Water Management

The Land and Water Forum (LWF) today published its fourth report, outlining 60 new consensus recommendations for how New Zealand should improve its management of fresh water and calling on the Government to urgently adopt all of its recommendations from earlier reports. More>>



Welcome Home: Record High Migration Stokes 41-Year High Population Growth

New Zealand annual net migration hit a new high in October as more people arrived from than departed for Australia for the first time in more than 20 years. More>>


Citizens' Advice Bureau: Report Shows Desperate Housing Situation Throughout NZ

CAB's in-depth analysis of over 2000 client enquiries about emergency accommodation shows vulnerable families, pregnant women and children living in cars and garages, even after seeking assistance from the Ministry of Social Development and Housing New Zealand. More>>


Speaking For The Bees: Greens Call For Neonicotinoid Pesticide Ban

The National Government should ban the use of controversial pesticides called neonicotinoids after evidence has revealed that even at low doses they cause harm to bee populations, the Green Party said today. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news