by Collinson FX
Image of the Day Matchracing in Noumea
Collinson FX market Commentary: November 6, 2012
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Markets remained quiet in the lead up to the all important US Presidential Elections which will begin to unfold tonight.
The race looks too close to call with a quantum change expected if the Conservatives can get up. The market looks more immediately at the pending 'Fiscal Cliff' which will be resolved by either President but with what combination of Tax rises and cuts (and to what?)! The path of the last four years would not auger well for markets although equities have traveled well being fueled by record monetary expansion by the Central Banks globally.
Romney would at least attempt to address the deficit and commit to fiscal rectitude. Europe has assumed the background but signals of further problems with Greek austerity compliance and continued Bailout remain. The first Tuesday of November is famous also in Australia and not only for the RBA interest rate decision!
The Melbourne Cup will overshadow Political and Financial events for one day which may allow Governor Stevens to slip under the radar.
A rate cut was a virtual certainty until the burgeoning recent inflation data revealed the seeds of growth. This data would have cast a cautionary tone to the RBA and may allow inaction to err on the side of caution. Stevens has moved on every Melbourne Cup occasion and pundits expect him to cut so beware any aversion as this would impact the currency to the upside!
Recent Australian trade data has confirmed a slowdown with a fall in global demand and the impact of the strong AUD so this may tip Stevens uncertainty to act!
External influences on Markets may be reflected in the Cup result with a powerful International challenge lead by the French but we love the Irish so Go Galileo's Choice!
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