Euro’s Downward Bias to Remain for Today
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Euro’s Downward Bias to Remain for Today

The RBA kept rates unchanged at 3.25%.   This non-move surprised many analysts who had expected a 25 bp cut.   The accompanying statement by RBA governor spoke of the upside surprise on inflation.   The RBA is still expected to lower rates one more time before the end of the year.   The AUD has  benefited  by the RBA’s action rallying to a high of 1.0437 before easing back a bit.   It is still trading above 1.0400.   Support is at 1.0410, then 1.0385. Resistance is at 1.0440 and 1.0465.

EUR traded in a small range overnight briefly testing the 1.2800 level before falling back below that level.   Greece has seen more protests over government plans to implement new austerity measures, so they can qualify for the next tranche of bailouts. The ECB meets later this week but no major rate move or announcement is expected.

The main focus today remains the US presidential election. Latest polls indicate that President Obama has 48% of the vote compared with Governor Romney’s 45%.   The handling of Hurricane Sandy has helped to boost the President’s numbers over the last few days.

As many of us know, the electing population does not actually elect the President.   We cast votes that enable the Electoral College to elect the President.   In the important electoral college race, at the moment it appears the President has accumulated 247 votes, while Governor Romney has 206 votes. The total votes equate to the number of representatives each state has. That leaves 85 “swing votes” in states where the candidates have been concentrating the last few days.   The breakdown of those states is as follows: Florida 29 votes, Ohio 18, Virginia 13, Colorado 9, Nevada 6, Iowa 6, and New Hampshire 4.

With the race so close and with the difficulty that it will take to count many votes in the New York metropolitan area, as voters use alternative methods to cast their ballots. The news media will be speculating all day as to the results as polls open here on the East Coast at 6 am.   The story here may be more how voters got to vote in this area as opposed to who they voted for.

Either way expect a quiet day.   EUR still has a downward bias and nothing today will change that.   Today’s winner could effect the EUR later tonight or tomorrow.   An Obama victory may mean a higher EUR, while most feel a Romney win would keep the EUR pressure on.

A small rally in the DOW yesterday.   Asian markets were mixed while European markets are mostly higher.   DOW futures are higher so expect a stronger start to this morning’s US equity market.

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Matthew Lifson

Matthew Lifson

Matthew Lifson is a Foreign Exchange Trader and a Market Analyst. with Cambridge Mercantile Group.