EUR 9.38 For Business Accounts Only

The Morning Track clearing

- The Morning Track – Clearing by Bob Savage
http://track.com/articles/the-morning-track-clearing/

This is the day before the election and the late Sunday news that the FBI cleared Clinton from the latest email investigation spurred a risk rally overnight – bonds lower, equities higher, USD bid. The logic goes simply, a Clinton victory means a December FOMC hike and business as usual. Clinton leads Trump by 2% in most polls still. Today is about clearing the decks for tomorrow – risk may be going back on but only half-heartedly, as most seem to be taking off worst-case scenario bets more than actively pricing in business as usual. FBI director James Comey told Congress last night: "Based on our review, we have not changed our conclusions that we expressed in July with respect to Secretary Clinton" and confirmed that it won't bring any criminal charges against Clinton. The central question for the day is whether this late story matters to the election and if the markets are right to see beyond the next 48 hours. The election trade in FX has always been MXN/JPY and th
at flew 3% higher overnight. The USD/JPY is holding just under the 105 breakout zone again. All of which means that FX markets maybe seeing outsized moves compared to the reality of other markets in part because of the liquidity risk premiums elsewhere and the view that this market can provide continuous access through tomorrow. This will be key to understanding the risk for today as many see the clearing part of the day more important than the betting part for tomorrow.