Profit-taking influencing markets ahead of big events
Nov 1 (Reuters) - Profit-taking is influencing financial markets ahead of big events and once clear of the risks stemming from the U.S. election, and a cluster of central bank meetings timed alongside that of the Federal Reserve, the most probable outcome for markets impacted by this pairing of risk is that they resume current trends.
The immediate risk for traders is non-farm payrolls data which have the potential to shock
The dominant trends are equity bull runs that will be supported by expected easing cycles and bond rallies that will also result from the lowering of interest rates.
Carry trades that have been popular this year like the cash that has been invested in pound, euro and other higher-yielding currencies are likely to be pared further as the basis for them - higher yields - is diminishing.
Because this adjustment has occurred close to the end of the year when risk is often reduced regardless of other factors, the risk-averse nature of a reduction of positions is likely to underpin the dollar for the duration of this year.
Next year may be different with the dollar sliding alongside the U.S interest rate and traders inspired to gamble on the back of China's huge spending plan and the abundance of stimulus stemming from easing cycles in most major economies as well as many emerging countries.
For more click on FXBUZ
Key markets impacted by profit taking https://tmsnrt.rs/3C6toAq
(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)
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