The American nation has decided – President Barack Obama returns to the Oval Office for a second term. The US dollar falls as investors take on risk, while the Canadian dollar keeps on track farther from parity.
President Barack Obama won his presidential re-election bid over Republican challenger Mitt Romney, defying history by winning a second term with the highest unemployment rate of any president returned to office since Franklin Roosevelt in 1936, and becoming only the second Democrat since Roosevelt to win another term. Obama prevailed narrowly in the popular vote, yet achieved an electoral sweep by carrying the crucial states of Colorado, Ohio and Virginia. In doing so, he kept intact the coalition of women, minority voters and young people that originally propelled him to office as the first black US president.
In a report by David J. Lynch and Mike Dorning from Bloomberg.com, “the US economy that earned President Barack Obama a second term looks nothing like the mess that he inherited four years ago. Instead of shrinking and shedding jobs, the country is growing at an annual rate of 2 percent and businesses are handing out new paychecks at a monthly average of 157,000 so far this year.”
Not to be deceived though, amid the world’s largest economy is far from thriving. US economic growth has been below its historical trend since March, according to the three-month moving average of the Chicago Federal Reserve Bank’s National Activity Index. The markets are also likely to shed some optimism as the nation faces the so-called “fiscal cliff” in the form of $607 Billion automatic spending cuts and tax increases, scheduled to take effect at the beginning of 2013.
Nevertheless, President Obama’s victory is seen by many analysts as a boost to the chances of continued monetary stimulus policies. Junya Tanase, Chief Currency Strategist at JPMorgan Chase & Co. in Tokyo comments that, “Obama’s re-election is likely to boost expectations of continued easing by the Fed.”
With market elation likely to be the story in the currency exchanges today, a sell bias for the Greenback-Loonie is recommended today. Be cautious though of probable technical price corrections that are likely to ensue.
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