Archived IMT (2010.11.03)

US DOLLAR on the backfoot ahead of this evening's FOMC decision (14:15 ET, 18:15 GMT/London). There is no discernible FX impact from the US midterm elections which saw a sizeable Republican sweep of the House of Representatives, removing vital decision-making powers from Obama's Democrats. The argument that a Republican majority in the house will be USD-positive due to the likelihood of stabilising the deficit does not have much validity partly because the fiscal hole is excessively significant that it won't matter by 1-chamber majority. There will be more on FOMC later today. In case you didn't see my recent tweets, I'm favouring USDCHF to regain 1.0050 and onto 1.0200 later this month with support holding at 0.9550. GBPUSD breaks out of 1.61 on better than exp Services PMI alongside a broadening GBP rally. Will cover FOMC scenarios later in the day on the possible disappointing reactions and USD impact.