Obama Win = Risk Play: Pro
By: Kelley Holland | News Writer
A clear victory by President Obama would boost risk sentiment, this pro says - but not for long.
If you're planning to watch the election results, plenty of pundits are warning that it will be a long night. But right now, a number of Wall Street pros seem to be expecting a victory for the president - and that is giving Rob Rennie, global head of FX strategy at Westpac Bank, a trading idea.
"If we do see a clear victory for Obama," he told CNBC, "then I think there is probably a bit of risk on for a couple of days, maybe a week or so."
But don't expect the sentiment to last, Rennie says. He thinks the smartest move is to sell into a rally in risk-sensitive currencies and buy the dollar.
"You do get the sense that the U.S. economy has passed something of a milestone," he says, and that should support the buck.
As for a trade, he says, "I like dollar-yen continuing to trickle higher" and possibly reaching 82.00 or 84.00.
In the same vein, Rennie is wary of the euro, and he recommends selling if it hits 1.3100 or 1.3200.
"You get a strong sense of the fundamentals deteriorating in Europe.," he says. "I think that's something that favors the U.S. dollar into the end of this year."
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