Last Friday’s key non-farm payrolls U.S. economic data came in a little worse than expected, at 161,000 as opposed to the market consensus which was expecting 174,000. This was marginally poor news for U.S. Dollar bulls even though it has been strongly overshadowed by all the natural focus on the U.S. Presidential Election which will be held next Tuesday.
The market is currently pricing in a 67% chance of a quarter-point rate hike taking place next month, down from 72% the day before the news release.
By far the major factor affecting the U.S. Dollar is the anticipated election result, with a Trump win seen as bearish for the USD. It is interesting that even as Clinton’s poll lead and odds seem to be holding up – and no reputable forecaster is giving her a smaller chance than 65% - the Dollar seems to be shrinking.
As Clinton’s small lead seems to stabilize and news of heavy pro-Democrat early voting in the key swing state of Nevada came out over the weekend, it will be very interesting to see if the USD opens stronger tonight.