US Voting Underway
Polling has opened across the US, and the first state results are expected after 00:01 GMT on Wednesday. If all the state votes are decisive, a winner may be declared by around 04:00 GMT. Market activity was predictably subdued during the US session overnight, and the only major market driver during the European session was rising concern over the situation in Greece − a key parliamentary vote on austerity measures is due tonight and a successful passage of the legislation is not a foregone conclusion. Reports suggest a special Eurogroup meeting originally scheduled for the Nov. 8 to discuss the situation in Greece has now been postponed. Another event risk is the European Commission’s budget forecasts due on Wednesday, which could refocus the issue on Spain. Meanwhile, the Spanish government still seems to be in no major hurry to request external aid – although Prime Minister Rajoy conceded yesterday that if yields were to rise sharply, a request would indeed be made. In the US the election outcome remains too close to call. From an FX perspective, an Obama victory could trigger an initial pullback in USD, given the currency appears to have garnered some support from hopes of a more growth-supportive backdrop under a Romney win – not to mention the sense that the market may start to question the ‘credibility’ of the Fed’s forward rate guidance beyond January 2014, when Bernanke’s term expires.
Click here to read the full report: UBS Morning Adviser Asia
UBS Investment Bank