FX trading volumes low

Traders were avoiding making any big bets ahead of the US polls.

IG Markets Singapore said:

The Singapore dollar continues to lose ground to the greenback this week as traders avoid making any big bets ahead of the US elections today.

Trading volumes have been very low and what action there has been involves flights to safety to the US dollar.

This has seen the USD strengthen against major currencies. The Singapore dollar edged down to $1.2246 as a result.

Dollar-strengthening is likely to remain a trend for the rest of this week even after the election results are known.

Worries over Greece’s continued participation in the eurozone and China’s change in leadership are also unsettling FX traders this week.

BK Asset Management meanwhile noted (for 5 November 2012 trading):

The euro fell to its lowest level against the U.S. dollar in more than a month. There was no major Eurozone economic data on the calendar but broad based weakness in European equities and rise in Spanish and Portuguese bond yields weighed on the EUR/USD and triggered stop loss selling below 1.2820.

Spain continues to brush off the need for a bailout. Economy Minister De Guinidos said a bailout was not discussed at the G20 meeting and no country is pressuring them to accept a bailout, they will seek one when the time is right.

He even said they are comfortable with the current debt-financing situation and can "guarantee" a current account surplus next year. Their attempt to reassure the market fell on deaf ears as euro continued to weaken against the U.S. dollar.

Final Eurozone service sector PMI numbers are due for release tomorrow along with producer prices and German factory orders. The sharp decline in German and French producer prices points to significantly softer inflationary pressures in September.