Risk Appetite Returns Clinton is Cleared Again

European equity markets are positioned to open more than half a percentage point higher on Monday, boosted by the news that the FBI has not changed its conclusion on the Hillary Clinton email investigation after announcing a little over a week ago that it had been reopened.

The timing of FBI Director James Comey’s disclosure has once again dealt a serious blow to Donald Trump’s chances of securing the White House, something the markets have responded very positively to. Risk appetite has returned at the start of the week following an awful run which saw the S&P 500 go on a nine session losing streak, the longest in nearly 36 years.

OANDA Trading Desk : Political Risk

Gold last week assumed its role as the Trump hedge, rallying back towards $1,300 and on a few occasions threatened to break beyond this new found resistance. Having failed to break through here, Gold now finds itself down more than 1% on the day and could come under further pressure as the day progresses and traders respond to the latest twist in the what has been one of the more bizarre Presidential campaigns.

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The only question now is whether the FBIs latest conclusion has come too little too late for Clinton and if the initial disclosure has done irreparable damage to her campaign. For a large number of voters, the fact that the FBI is yet to find anything to determine her guilt will not give them comfort and the fact that she has been embroiled in this investigation right up to polling day will create a huge trust issue.

There very often is not smoke without fire and I think this may play on many voters’ minds as they go to cast their vote. This may be why we’re seeing sentiment improving this morning but investors are not yet getting carried away. The investigation obliterated Clinton’s poll lead last week and traders may be awaiting some indication that Clinton has retaken a convincing lead.

Week Ahead US Presidential Election to Dominate Markets

Heading into tomorrow’s vote, there isn’t much else on offer in terms of major economic events or earnings which will ensure focus remains primarily on the election. Retail sales and investor confidence numbers from the eurozone are the only releases that stand out today but I expect they may pass with little attention given the much more important vote tomorrow.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.