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FX Impact: US Election Slows Moves

FX Impact: US Election Slows Moves

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A few currencies around the world did weaken a bit, including the euro, which lost ground amid renewed concern that Greece may be reaching the limits of its ability to repay its considerable debts.

Notwithstanding the moves shown on our weekly Currency Impact Report, ongoing uncertainty surrounding the U.S. presidential election muted currency movements last week, as did Hurricane Sandy, which shut down U.S. trading on Oct. 29 and Oct. 30.

The most important stories coursing through currency markets including the following:

  • Currency movements were rather mild last week, as investors wait to see the results of the presidential election in the U.S.
  • In Europe, the euro retreated slightly over the course of the week, as investors grew worried Greece would struggle to win bailout funds in its next round of financing—a risk that could lead to Greece’s exit from the euro. Greek society is reaching a tipping point with regard to its ability to tolerate austerity measures. As a result, U.S. investors in Europe lagged their European counterparts by an average of 0.68 percent in the eurozone.
  • The South African rand declined over the course of the week, with U.S. investors lagging behind local counterparts in the South African equity markets by 1.02 percent. The rand declined as concerns grew that demand for South Africa’s assets and commodities would fall in the near term. According to Bloomberg, foreign investors sold a net of $714 million worth of South African equities in October alone.
  • The Japanese yen also saw some significant pullback last week, with U.S. investors lagging their Japanese counterparts in the Japanese equity markets by 1.22 percent. The yen dropped on speculation about an expansion of stimulus efforts from the Bank of Japan at an end-of-month meeting in October.

 

The data in our weekly report comes to us courtesy of MSCI.

 

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