In the early hours of this morning, Barack Obama’s victory
in the US 2012 presidential election was confirmed as he fought off competition
from his Republican rival.

The marginal favourite’s re-election for a second term led
to the some reactionary dollar weakness. Obama’s propensity to spend in order
to boost the American economy paves the way for further easing policies, should
they be needed.

In the early hours of this morning, Barack Obama’s victory
in the US 2012 presidential election was confirmed as he fought off competition
from his Republican rival.

The marginal favourite’s re-election for a second term led
to the some reactionary dollar weakness. Obama’s propensity to spend in order
to boost the American economy paves the way for further easing policies, should
they be needed.

As the US looks forward to its next four years under the
president, the next key issue to tackle is the fiscal cliff, set to initiate at
the start of next year. Though for now, the dollar weakness stems from renewed
enthusiasm for riskier currencies.

Yesterday despite some quite terrible European data,
including German Factory Orders showing contraction of 3.3%, and continuing uncertainty
regarding Greece, the euro actually responded with some resilience as the US
election’s veil of unpredictability ignored the fundamental issues.

Build up to Thursday’s ECB and BOE rate announcement will
spark moderate interest, however today investors should keep a keen eye on
Greece’s government debt crisis vote this morning, which will take a pivotal
role in determining sentiment towards the euro.

Today Obama will dominate the headlines, and we expect the
currency markets to be equally impacted by the continuation of the president’s
term.

 

Today’s Key
Announcements:

• 10.00am – EUR – Retail Sales m/m: expected to be flat at
  0.0%
• 11.00am – EUR – German Industrial Production m/m: expected
  to contract by 0.4%
• Tentative – EUR – Greek Gov Debt Crisis Vote
• 18.00pm – USD – 10y Bond Auction