The lead-up to the U.S. Presidential election was always expected to be lively, but the events of the last couple of days has seriously taken its toll on investor sentiment, as is clearly evident across a number of asset classes again today.
U.S. futures are pointing higher on Monday, on course for similar gains to what we’re seeing in Europe where indices are threatening to or have broken above recent trading highs, in what could be a bullish sign for equity markets.
We’ve been through a busy volatile period for the financial markets and while I don’t for a second think it’s passed, we may just be saying them take a little breather so far today. The FOMC minutes on Wednesday didn’t really tell us anything we weren’t aware of already, which is why the reaction to them was fairly muted.
The only currency not capitalising on the depreciating pound is the yen, which is coming under some welcome pressure itself. Haruhiko Kuroda’s admittance on Monday that hitting the 2% inflation target will likely now have to wait until 2018 gave the yen the dovish kick it needed.
U.S. equity markets are expected to get the week off to a good start, supported by higher commodity prices, but attention will inevitably be on Wednesday with two major central banks set to announce their latest policy decisions.
It’s been a quiet start to the day in financial markets but things are likely to pick up considerably, with the Bank of England interest rate decision and minutes due and a raft of data to come from the United States.
The Federal Reserve blackout period is now upon us, giving traders a week to speculate on the impact of what has been said and the few pieces of data we get between now and the decision next Wednesday.