Rates as of 0500 GMT

Market Recap

AUD and NZD were the biggest winners since Friday morning. I doubt if this had anything to do with the Labor Party victory in the Australian Federal election, as was widely expected. Thats because a AUD didnt gap higher at the opening Monday, as wouldve been expected in such a case, and b NZD kept pace with AUD, suggesting that both were being moved by outside forces probably the recovery in Asian stock markets this morning except for China.

The jump in the two currencies came shortly after the SP 500 futures started trading, which suggests to me that its more of a general riskon trade than anything having to do particularly with Australia or New Zealand.

As for the Australian election, the differences with the outgoing regime focus on climate change, womens issues and anticorruption efforts. Theres not likely to be a major change in economic policy and so the election probably wont have much impact on the exchange rate.

The riskon mood would also explain why CHF, USD, and JPY are the main losers today, as risk sentiment improves.

The equity markets are worth a word. The SP 500 was 20.6 from its peak earlier this year, i.e. in official bear market territory defined as down 20 or more as the trading day finished in Europe on Friday. But there was a late rally and a large marketonclose imbalance to buy for no obvious reason, which send the index from down around 2.3 on the day to up fractionally 0.01. Nonetheless, the SP 500…