Intraday Market Thoughts

Greeks Pass Austerity Vote, FX Skeptical of Post-Election Rout

by Adam Button
Nov 7, 2012 22:27

Euro Stabilizes as Greek government secures sufficient votes to pass new round of austerity. US stock markets kicked and screamed at the outcome of the election but foreign exchange remained sanguine. The overall daily moves were less than 50 pips with the euro lagging and yen leading. Asia-Pacific trading features Australian employment. Last nights Premium Insights are in full activation and include the latest weekly and monthly charting on EURUSD See more details below.

It is a challenge to explain the US stock market reaction to the election result. As we said yesterday, this was the most likely result and should not have been a shock to anyone. It is likely an emotional response rather than a rational one.

It isnt the first time markets have thrown a fit after a Democrat won the White House. Its the fifth time since 1932 that the Dow has fallen more than 2.4% on the day after a Democratic win. The most-recent example was 2008 when the Dow fell 5% on the day after Obamas win. It went on to gain more than 60% over Obamas first term.

Cooler heads will likely prevail in the week ahead. The US economy is improving and politicians will eventually hammer out a solution to the fiscal cliff.

FX risk trades seem to be anticipating a rebound. They merely stumbled as stocks tumbled but the euro remains below the 200-day moving average as Greece prepares for a late-night vote on the latest round of austerity.

The Australian dollar held off several attempts to break below 1.04 as buyers accumulate positions after this weeks RBA decision. That bodes well for the pair in the days ahead but first, at 0030 GMT, data on Oct Australian employment is expected unchanged with the unemployment rate ticking up to 5.5% from 5.4%.

Last nights the Premium Insights trades on EURUSD, USDJPY, GBPUSD, EURJPY, EURGBP, CADJPY, AUDUSD, gold, silver and oil. DIRECT ACCCESS Nonsubscribers can click here to join



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