U.S. Stock markets were closed Monday and Tuesday due to Hurricane Sandy. Many investors are in a state of unrest as the month of October ends. There are investors whose fiscal years end in October, therefore they may want to rid themselves of losing stocks for tax purposes. This is why some market participants believe it is essential for the markets to open on Wednesday.
According to a report from earlier today on FXstreet the estimated storm cost is 20 Billion U.S. Dollars. Hurricane Sandy has caused the first two consecutive days of stock market closure, due to weather, since the blizzard of 1888. This snow storm poured 40 to 50 inches of snow on New York, New Jersey, and other North Eastern states.
Paul Ashworth, the chief U.S. economist at Capital Economics said this on Tuesday concerning the Hurricane: “…the overall economic impact is likely to be very modest.” Ashworth also mentioned that Hurricane Sandy will hit economic output in the short-term.
In the Forex world, the U.S. Dollar seems weaker today than it was yesterday. The Forex market is not very volatile Tuesday. With bearish United States news (Sandy), it is possible to see a bullish or ranging reaction. This phenomena is sometimes due to Risk Aversion.
Other debris caused by Sandy could include a delayed Non-Farms report Friday.
The United States Labor Department on Monday stated that it is “working hard to ensure the timely release” for the October jobs report. Intentions are to release the report as scheduled but it has been acknowledged that the storm could cause a delay.
Being the last depiction of the state of the labor market before the Presidential Election, Friday’s job reports will be watched closely by investors and economists.
According to the Wall Street Journal, “Friday’s employment report will be the final read on the labor market ahead of the November elections. Initial reports that a delay was possible briefly fueled speculation that the jobs data, good or bad, might not be revealed until after the elections.”
Even with Sandy’s destruction, I think the USD will hold it’s head above water, at least for this quarter. With the elections and recent bullish economic releases, I think it is possible for the Dollar to roll strong into 2013.
Once 2013 comes along the U.S. could be coming closer to the “fiscal cliff”. This could mean possible tax hikes and spending cuts. Remember, the U.S. is 16+ Trillion dollars in debt. Don’t let the recent 7.8% unemployment claims make you comfortable about where the American economy is at.
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