Risk trades and US dollar surge after Clinton cleared by FBI
The market is screaming today that the momentum for Donald Trump was stopped dead by the FBI decision not to further pursue an investigation against Hillary Clinton.
The rally in stock futures and USD/JPY shows traders are betting on a Hillary Clinton win on Tuesday.
That leaves about 34 hours of trading between now and when the first election results will be posted.
What happens in the interim?
Unless there is some kind of bombshell between now and late Tuesday, look for the momentum for risk trades to continue.
Wall Street is filled with degenerate gamblers who have long expected Clinton to win. This is an opportunity (even after the rally so far) to get good value on a Clinton bet. The S&P 500 has fallen 3% in the past 9 days of worries but futures are up 1.35%. Add in a further relief rally and the S&P 500 could rise 5% from here.
My guess is that traders are doing some simple math on that and you will see stocks and the US dollar rally right through the close tomorrow.
USD/JPY isn't quite as compelling but the story is largely the same. Look for a test of the October high of 105.53 before the results roll in.
Outside of the election, I don't think any news matters except for (perhaps) oil/OPEC news.
