Election, Fed, & Jobs

The month of October ended on a cautious note in the broad markets. The USD held firm against the EUR. However, the GBP did manage to keep pace against the greenback. Wall Street managed to turn in a profitable month, but on a much more cautionary note compared to September. The first week of November could prove to be a memorable one given that there is a major U.S. election tomorrow, Non Farm Employment Change numbers are on schedule Friday, and there is a considerable overhang from the Federal Reserve which will make an official FOMC monetary policy statement on Wednesday (note that it is a day after the election in the States). Multiply that with a combination of speculation and worries about inflation within certain commodities, and it is easy to predict that markets may be unpredictable.

However out of the chaos frequently comes order. The markets tend to be rational and investors who sometimes appear to be trading merely on sentiment often do have a long term agenda. While the USD has been weak, it has shown a certain degree of holding its own against the EUR the past two weeks. This as Europe has again had to face rather unpleasant economic music regarding lackluster data. With so much data and news coming out this week we could see a legitimate holding pattern take place in which known ranges become the playground of traders attempting to take chances on momentary bursts of momentum.

The U.S. will release its ISM Manufacturing PMI today and the estimated mark is calling for a result of 54.2, which would be slightly below last month’s outcome. The U.K. will bring forth it Manufacturing PMI and it is expected to nearly match the previous total. Europe will be fairly quiet today and tomorrow only its Final Manufacturing PMI will see the light of day.

The JPY continues to trade at the strongest parts of its value and finds itself bouncing around its highs against the USD. The AUD has staged a slight comeback and is within what has become a known range, albeit within a breath of its highest value against the greenback. The AUD had done this as Gold has gone to record highs and this has in essence underscored how noteworthy the broad market place is.

With all the talk of an election that could fundamentally shift rhetoric in the U.S. and the rather well storied beliefs that the Fed will announce its quantitative easing policy, the fact that these two aspects will be known for sure on Wednesday may lead most traders to take safe positions and wait out any possible storms. However cautious markets often lend a hand towards market participants who seek comfortable ranges. The question is just how comfortable the ranges will be the next few days.

Written by bforex.com