It's risk-off in markets again, as traders and investors are concerned about US political risks. Trump's chance of winning the US election have increased as Hillary Clinton's campaign has been hurt by the FBI investigation. A Trump victory would put stocks worldwide under strong pressure and lead to a rush into safe-havens (JPY, CHF and Gold), while the Dollar and risk currencies (CAD, MXN…) would suffer.
Overnight, the Euro extended gains against the Dollar and rose to a high of 1.1075. EUR/USD remains very well bid, and support is now seen at 1.1020 & 1.0990. GBP/USD continues to consolidate and was stuck in a 1.2220-50 range in Asia.
USD/JPY declined sharply yesterday and extended losses overnight, falling to a low of 103.65. Much will depend on the Fed tonight, but a break below 103.15 support could intensify negative momentum and signal a move towards 102.
Commodity currencies were mixed. The Canadian Dollar declined along with Oil, while the Australian Dollar fell amid the broad risk-off sentiment. However, the New Zealand Dollar rallied against most currencies overnight after better than expected employment data and an uptick in inflation expectations. NZD/USD rose from 0.7160 to 0.7230.
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