Retail Sales' Message from Main Street

Thanks Francis. pls refer to the latest EUR analysis in the latest Intraday Thoughts. Also, it is better to add comments to the Comments Box in the latest article. Thks
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Francis, If youre asking about the short-term impact of the US elections on FX markets i.e. the 12 hours before and after the election results, then this obviously depends on 1) how close will the race be in the next 3 weeks (more suspense = more volatility) and 2) whether there are other market-related developments prevailing in that week. Currently, Obama is the favorite to win according to the electorate votes. I prefer not to make oversimplified statements, but regardless of how close the race will be, an Obama victory coupled with broader gains for the Democrats in Congress, may be negative for stocks and negative for carry trades (due to taxation issues). The only problem with this analysis is that it implies a dollar rally (against all currencies except the yen), which may not be the true in the case of US elections as these prove to be a US-centric issue, ie predominantly dollar-negative. We all remember how the dollar sold off during the 2000 elections when Al Gore was wrongly proclaimed to be president and how the dollar rallied aggressively against the euro when the White House was revealed to have gone to the Republicans. Be careful.

Hi Francis, before i answer the question on EURUSD, id like to draw attention to the fact that Oil has lost 50% of its July highs falling to $72 per barrel, while gold is at $838 per ounce, thus, further propping the gold/oil ratio to 11.6 from the 5.8 lows of this summer, which is consistent with my prediction for a "global recession" each time there is a notable bounce in the gold/oil ratio.

As for EURUSD, in 3 months time I expect it at about 1.29-1.30.

Hi Steve, good to know about your gains in cableand gbpjpy. USDCAD has been outrageous just as CADJPY has been due to plummeting oil and negative currents from US. I see the peak in USDCAD occuring in December near 1.24.