The U.S. Dollar traded lower in what is expected to be a light trading session. Today’s focus is on the U.S. presidential election with very little emphasis on the news or key fundamentals.
Although the EUR/USD posted as small gain yesterday, much of the move was attributed to position squaring ahead of the election. Uncertainty continues to be the driving force behind the weakness in the Euro. Investors are waiting for Spain to ask for financial aid. In the meantime, there is still risk surrounding Greece. Today it was reported that German factory orders fell the most in a year in September. This could be an indication that Europe is headed toward a recession.
Short-covering and position squaring helped boost the GBP/USD. Without any major economic news, traders are focusing on the outcome of the U.S. election. The general consensus is that a win by President Obama will mean a continuation of the dovish Federal Reserve. A win by Romney could mean that Fed Chairman Bernanke is out.
December Gold traded better as traders hedged themselves against the uncertainty of the election with long positions. Overall, low inflation has been helping to drive gold prices lower. Additionally, the stronger dollar has made gold relatively expensive to foreign traders.
Oversold conditions helped drive crude oil prices slightly higher. Oversupply concerns have been the driving force behind the recent lower prices, but technical factors kicked in today, reversing the current trend. Wednesday’s crude oil report is going to be important because it will be the first to reflect supply and demand after Hurricane Sandy.
Overall, look for light volume early in the session, but for it to increase as the election results become known.
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