Right now, there is very little anyone is (and can be) certain about in the markets. We’ve got a perfect storm of global uncertainty about to come to a climax, and holders of pretty much every available asset, financial or otherwise, are wondering if their allocation is the right one.
Perhaps more importantly, this uncertainty isn’t rooted in the question of whether the allocation is the right one to maximize gains. Instead, it’s rooted in whether or not the exposure can limit losses. This represents a wider fundamental shift in the markets.
In last month’s Forensic Forex, we discussed how this sentiment might impact the majors ahead of the US elections. We noted that the US dollar would almost certainly continue to gain strength, and that this would have collateral impact on a number of areas of the US economy. We also noted that the Brexit could continue to weigh on the sterling, and as the situation between the UK and Europe played out, we would gain a bit of clarity as to how far sterling might fall in relation to its European counterpart….