Nov 04 2008
US Election Day Takes the USD Up
On the eve of the U.S. Presidential election, the Dollar posted large gains of 150 points to close at 1.2580 against the EUR, helping to erase some of its losses from late last week.
The Dollar continued to shrug off poor economic data stemming from the U.S. economy as the Institute for Supply Management released the Manufacturing Purchasing Manager survey. The survey came in below the forecasted value, displaying an overly pessimistic view of the U.S. manufacturing industry. This was one of the worst outlooks in the survey’s history, adding more evidence of a recession in the U.S. economy.
U.S. equities were little changed in light trading due to the uncertainty of the U.S. economic situation and the decision of who the next U.S. President will be. Some analysts forecast a rise in the stock market directly following the election as it has historically provided some market confidence and relief for anxious investors.
In early trading this morning, the AUD/USD fell sharply. The Reserve Bank of Australia surprised the market today as the bank cut Interest Rates by 0.75% to 5.25%. This was a greater than forecasted rate cut by another quarter of a point. The move came as a shock to traders as the Australian economy has not shown the same amount of weakness as the U.S. economy.
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