Safe Haven Currencies in the Lead – 2nd November 2016
Safe Haven Currencies in the Lead – 2nd November 2016
Yesterday the possibility that there will be President Trump looked closer as a Washington Post opinion poll gave Donald Trump a 46-45 lead over Hillary Clinton. As anyone who followed Britain’s EU referendum will recall, opinion polls are not always a reliable guide to election outcomes. However, investors found it hard to overlook this one and sold their holdings of “risky” assets in favour of gold and the safe-haven Swiss franc, Euro and Yen.
Sterling cannot be considered a safe haven at the moment with Brexit still casting a shadow over it the pound, in just the same way the uncertainty implicit in a Trump Presidency makes investors wary of the US Dollar. Both Sterling and US Dollar lost out yesterday with the Swiss Franc rising 1.4%, while the Euro made gains of 0.8%. Risk-off sentiment relegated the South African Rand to the back of the field with a -1.2% loss.
The only disappointment among yesterday’s manufacturing sector purchasing managers’ indices was Britain’s 54.3. It was not far adrift from the predicted 54.5 but it missed target and investors do not exactly have a forgiving attitude to Sterling these days.
Switzerland’s 54.7 was the best of the numbers released during the London session while overnight the New Zealand’s Dollar got some help from the third quarter employment data which revealed unemployment fell to 4.9% from a downwardly-revised 5.0%. All in all, they were good numbers and the Kiwi Dollar strengthened by 0.8%.
Few investors expect there to be any change in interest rates following today’s meeting of the Federal Open Market Committee. They will, however, be hoping for guidance as to what – if anything – the FOMC might have in mind for next month’s meeting. With the US elections less than a week away it is inconceivable that the Fed will raise rates today. For the same reason it is unlikely to give a clear steer on next month’s decision.
The two numbers to watch are the UK construction PMI and the US ADP employment change.