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1 Outta 2 Ain’t Bad

by Sean Coakley | December 5, 2016

– Italy Votes No – EUR Rises

– UK High Court To Begin Brexit Hearings

– US Stocks Poised to Set Record on Open


For presumed members of the global elite, 2016 hasn’t exactly been a great year on the political front. As a wave of populist resentment has threatened the global establishment, market participants have had to contend with spikes in market volatility along with uncertainty as to the shape of the emerging world order.  This weekend was no different, as despite a favourable outcome in the Austrian election, last night’s failure of proposed constitutional reforms has cost the Italian PM, Matteo Renzi his job and now calls into the question the future of Italy’s embattled banking sector and relationship with the EU, as right-wing populists in Italy see this as their chance to gain power.

The euro is now trading higher after bouncing back from post-referendum lows, the pound has also gained ground on the greenback while the yen has notched lower.  Outside of currencies, it looks as if the prevailing Trump Trade has begun to ebb with both equities and the US dollar flat, this leaves markets now searching for a new narrative to drive price action. Despite this oil and commodities are still moving nicely in the wake of last week’s OPEC announcement, this has allowed the loonie to take flight while its commodity sensitive counterparts in New Zealand and Australia remain on the back foot.

With the market shrugging off the latest political developments, there is the potential that we see a shift from the more sentiment-driven trading, that has been pervasive as of late to a more data-driven market. With the United States still putting out impressive employment and production metrics along with Governor Dudely speaking later today and the FOMC rate announcement next week, there is a good chance that the latest round of US dollar weakness is short lived. USD buyers, Beware.


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