S&P 500 futures fall 0.3%
A slight retreat in the risk mood as we get things going, which reflects some of the selling that we saw in US trading yesterday. As such, the dollar is seen gaining by about 10-20 pips across most major pairs ahead of the European cash market open.
EUR/USD is now down to 1.2257 from 1.2270 earlier while GBP/USD has pared its earlier advance, slipping from 1.3600 to 1.3570. Elsewhere, AUD/USD has pared gains slightly from around 0.7720 to 0.7705.
The moves aren't anything extensive but it reaffirms that the market is still trying to sort itself out as we get the new year underway.
Once again, the Georgia runoffs will be one to watch later today. Some thoughts on that from my post earlier:
As for the trading day ahead, the Georgia runoffs present the most considerable risk factor for the market but I would argue it is largely a short-term excuse for real money flows to pick a side of the coin to start the new year.There is the distinct possibility that the results won't be known for days but the market is always quick to pick up on the finer details - similar to the November presidential election - so don't expect the market to be blinded for too long.Even more so in the case of a Republican comfortably leading in either of the two races.In any case, even a Democratic sweep doesn't do much to change the overall narrative in the market if you really want to drill down into the nitty gritty. However, the market could still use all of that as an excuse to put on some early positioning to start the year.A risk rally after a 'blue wave'? It must be to do with better stimulus prospects and more spending set to follow. A risk selloff after a 'blue wave'? It must be to do with concerns about corporate taxes that could follow (even if it is extremely unlikely to pass).A risk rally after Republicans hold the Senate? It must be to do with the status quo from last year being maintained. A risk selloff after Republicans hold the Senate? It must be to do with disappointment on a smoother legislation passage in Congress.If anything, the big picture narrative is more key regardless of the results and that is largely to do with the Fed and the printing press. As long as that remains as it is, the market can always rely on the same tailwind it got from trading last year to translate to this year.
