So the President is who the President was...

Hi Guys and Girls,

Obama was re-elected as POTUS last night. Whilst remaining internationally popular, Obama's first term was not as successful as the U.S  public originally anticipated. The shine has worn off, Obama has lost some of his youthful vigour, and the economy has definitely seen better days. Still...

Be thankful this man doesn't run America. Seriously.

I'm not going to go into my own political views too much, but I'm happy Obama won. If Ronald Reagan reincarnated Mitt Romney would have won, we would be led back down the road to further deregulation of markets, a large reason the global economy got into the mess it was in.

What effect has this had on the market? Let's have a quick look.

The news of Obama being re-elected resulted in the dollar falling against a basket of currencies. This essentially means the dollar has become cheaper relative to other currencies. What are the reasons for this?

Speculators are now more confident that quantitative easing will continue, which was not certain under Romney. In simple economic terms, this generally means increasing the supply of money (in this case, the Federal Reserve is increasing the amount of dollars). The goal of this is to stimulate the economy. QE3 (Quantitative Easing Round 3) is expected to continue until mid 2015 at least, meaning the dollar is likely to weaken further down the line, so a lot of speculators have sold dollars in the hope of buying it in the future at a lower price.

This is basic trading strategy using fundamental information, and when a lot of people speculate on fundamental information (such as an election, or an important release from a central bank) then you often get knee-jerk reactions such as this.

So there you have it. Let's finish off with a video of Obama's basketball highlights :)

What were your views on the election?

Thanks for reading,

Jr
www.twitter.com/jr_dot