Wednesday November 3, 2004 - 10:09:02 GMT
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FOREX: US OPEN MARKET POINTS 11-03-04
US Election Rests on Ohio
Assuming all the state votes continue their trend, by the end of the evening George Bush will have 264 electoral votes and John Kerry will have 252. Ohio’s 20 electoral votes will determine which man will be the next President of the United States. Presently George Bush enjoys 140,000 lead with over 650,000 absentee and provisional votes yet to be counted. Ohio Secretary of State Ken Blackwell said Wednesday that it would take 11 days for a final result to be declared in the battleground state. Blackwell said that under state law, Ohio election officials would begin counting outstanding provisional ballots 11 days from Tuesday on Nov 13.
A Kerry victory may be a long shot but he refused to concede even as Bush was preparing to make a victory speech. Although the prospect 2000-election-like delay appears certain the market has taken the news in stride with EUR/USD range trading between 2670 and 2730 for most of the European session. Bush’s sizable lead in Ohio is quite different from his razor thin margins in Florida in 2000, making the reversal an unlikely possibility.
Assuming Bush retains the Presidency for another four years we continue to believe that the long term implications of this Administration’s policy will be dollar bearish. John Snow statements to the contrary, the Bush Administration has done little to support the dollar, in large part because it needs to stem the record Current Account deficits through a gradual devaluation of the greenback. This policy is echoed in the statements of Fed officials like Yellin and McTeer both of whom indicated a lower dollar will be necessary to rebalance the ever growing Trade Deficit. This may be one reason for the absence of a dollar rally in light of a relatively certain political result.
FX Spot Overnight
- EUR range trades supported by mildly bullish Euro-zone data and muted reaction to US election
- JPY continues its rally form oversold levels targeting 107 handle
- GBP recoups 8400 handle as PMI Services rebounds smartly
- CHF temporarily trades through 2100 as risk premium diminishes
- 15:00GMT – (10:00 AM EST) USD Factory Orders (SEP) Expected 0.50%, Previous –0.1%
- 15:00GMT – (10:00 AM EST) USD ISM Non-Manufacturing (OCT) Expected 58.3, Previous 56.7
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