America is Stunned as Trump Wins the US Election
It seemed like Brexit 2.0. Just as the Brexit vote spooked markets a few months ago, the US elections too managed to deliver an edge-of-the-seat result. Donald Trump won the US presidential election early this morning in a stunning victory that sent shockwaves around the world. The business tycoon and former reality TV show host will now call the White House his new home. Gathered at the Trump Tower on Fifth Avenue, supporters of Donald Trump clinked glasses and burst into jubilation as the results slowly trickled in.
However, global equity markets were rattled by the shocking result. In hindsight, Trump's good behaviour in the final fortnight might have turned the tables on Clinton as he relaxed and let Clinton’s email scandal dominate headlines.
Pound Sterling – UK Markets
The Pound surrendered some of its early morning gains against the greenback. The US Dollar weakened across the board following news that Donald Trump is the new US President. On the domestic data front, UK’s goods trade deficit widened in September.
Yesterday, Sterling ended lower against both the US Dollar and the shared currency. Data showed that British manufacturing production surpassed expectations for September. However, the nation’s total industrial output surprisingly declined during the same month, pulled lower by widespread summer maintenance shutdowns at the North Sea oil and gas fields. Additionally, UK’s reputed think tank, National Institute of Economic and Social Research (NIESR), indicated that the British economic growth probably slowed in the three months to October. The UK economy expanded by 0.4% during the period, a bit weaker than the official growth reading of 0.5% in the three months to September. NIESR further stated that British consumer spending is likely to fall in the coming months as prices begin to rise.
US Dollar – US Markets
The greenback is trading in negative territory against the Pound and the shared currency this morning, after Donald Trump was elected the 45th President of the US. The Republican candidate, Donald Trump, won 276 electoral votes and defeated Democratic candidate, Hillary Clinton, who won 218 electoral votes. The Surprising win by Republican Presidential nominee, Donald Trump, spurred a sharp decline in US stock futures and induced broad strength in safe-haven assets around the globe. Trump will have a Republican-controlled Congress to ratify his agenda and the ability to appoint Supreme Court justices in the coming years. Later today, market participants will focus on US MBA mortgage applications and wholesale inventories data for further cues in the US Dollar.
The US Dollar strengthened against most of its major peers yesterday. Data indicated that NFIB small business optimism index in the US unexpectedly advanced in October, marking its highest level in a year. In other economic news, JOLTS job openings increased less than anticipated in September from August.
Euro – European Markets
The shared currency is trading higher against its major peers this morning. The Euro zone economic calendar looks relatively dull today with only the European Union (EU) Commission’s economic growth forecasts up for release. The EU Commission Autumn 2016 Economic Forecasts will be out in some time. In its latest release, the Commission will also provide an assessment of the fiscal measures announced by the EU governments in their draft budget bill. Looking further ahead this week, market participants await German consumer price index along with industrial output data from France and Italy.
Yesterday turned out to be a disappointing day for the Euro zone economy watchers. Germany, which serves as a harbinger of the Eurozone economy, delivered weaker than expected economic results. German industrial production logged its biggest drop in two years in September, as growth shifted into lower gear during an uncertain summer for manufacturers. Also, the nation’s trade surplus narrowed in September.
Other Currencies – Highlights
The Swiss Franc initially traded higher against the US Dollar this morning, as investors looked for solace in the safe-haven currency in response to a dramatic deterioration in risk sentiment after Republican candidate, Donald Trump emerged victorious in the US Election. During the previous session, a report released by the State Secretariat for Economic Affairs showed that Switzerland’s seasonally adjusted unemployment rate remained steady at 3.3% in October, largely in line with what markets had anticipated. In other economic news, Swiss consumer prices rose less than expected last month. However, on an annual basis, consumer prices continued to decline in October. Prices in the country have been falling since late 2014. On the other hand, Swiss foreign currency reserves advanced above expectations in October.
Separately, the Swiss National Bank (SNB) Governing Board member, Andrea Maechler, once again committed to intervene in the currency markets, if the outcome of the US election triggers a rush into the Swiss Franc.