Political events do not usually dominate stock markets for very long. However, a look at history shows that the US presidential cycle has a stronger influence on capital markets than is generally assumed. Knowing well that history never repeats itself exactly, we want to use this publication to place this year's US elections in historical perspective and make an estimate of the short to medium-term implications of the outcome of the election for US equity and interest rate markets. |
The (geo-)political turbulence of recent weeks has eased somewhat and macroeconomic data has regained prominence. Monetary policy and interest rate expectations remain key factors for the currency markets. For EUR/USD, this means a slightly higher notation, and the rollercoaster ride of EUR/CHF is currently heading upwards. The fact that the central banks' interest rate policy can rapidly affect the markets was once again demonstrated by the example of the Czech koruna. On the other hand, the Hungarian forint has already entered a relaxed summer mood. With this issue, things will also be quieter concerning the FX Watch as well. Until 28 August, we will only be issuing this publication on a monthly basis. This issues features
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We were already focused on the uncertainties that the US election could trigger on financial markets. But we did not have to look that far, as the European elections and the resulting snap elections in France increased the risks for the euro, in line with the motto: “We have euro risks at home”. This development boosted safe havens such as the US dollar and the Swiss franc, helping them to strengthen against the euro. Riskier assets, such as the Polish złoty, lost ground. On the other hand, the rouble is struggling with different issues: US sanctions are sending the Russian currency down a path of uncertainty. Meanwhile, we can observe a strong Albanian lek and Serbian dinar in SEE. This issues features
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The ECB kicked off the June meetings of the major central banks today, and as has been the case for the past few months, interest rate expectations and differentials remain a key driver of the currency markets. The rate decisions by themselves are unlikely to cause many surprises for EUR/USD. Still, the hopes are high that the central banks might send important signals. In the case of the SNB, and therefore EUR/CHF, the data leaves more room for doubt, and currency markets reflect this uncertainty with a stronger franc. A more cautious CNB has prompted us to issue new EUR/CZK projections while the risks for EUR/HUF remain balanced. In Ukraine, the NBU continues to be confronted with increased uncertainty in the market. This issues features
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The current moves in the currency markets once again reflect how strongly markets react to current data releases. Slightly better-than-expected figures from the euro area and China, encouraging inflation figures from the US and the positive global momentum is already picking up speed, providing a tailwind for riskier assets such as the euro or the CE-3 currencies, while the dollar is weakening. In Romania, a cautious central bank has recently supported the RON, and the rouble is finally showing the effects of a better trade balance in the form of a stronger exchange rate. Regarding the hryvnia, the NBU continues to manage the currency successfully in the stormy environment of FX market liberalisation measures. This issues features
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