U.S. Election Still Up in the Air as FBI Opens New Clinton Investigation

In the movie, The Godfather:  Part III, the main character, Michael Corleone once said these famous words, “Just when I thought I was out… they pull be back in.” Well, I have to say that after Friday’s shocking announcement that the FBI is probing new emails related to Democratic Presidential candidate and current election front-runner Hillary Clinton just 11 days before the vote, I have been pulled back in.

Prior to this news, I had been following the price action in the major markets, reading the polls and watching the debates, and came to the conclusion that Clinton was going to win the election and the final vote wasn’t even going to be close. However, Friday’s events have made me reconsider and now I believe the vote may be closer than I previously thought and yes, investors should be worried about the outcome.

Although the story is still developing, it already has had an impact on several markets. The news may not be strong enough to change the trends at this time, however, it is important enough to encourage investors to make changes and adjustments to their positions in several markets.

Mexican Peso Volatility

For example, after the release of the story, the Mexican Peso fell about 1 percent to trade at 0.05255 against the U.S. Dollar, while the Canadian Dollar traded near session lows against its counter-part in the U.S.

The decline in the Mexican Peso is clearly representative of a fear that Republican candidate Donald Trump still has a chance to win the election. And, if you recall, he is the candidate that promised to be tough on illegal immigration, even suggesting that the country build a wall between the U.S. and Mexico.

Wall Street Not a Big Fan of Trump

U.S. equity markets also fell on the news because Wall Street believes that a Trump victory will be bad for business. The U.S. Dollar index also weakened because investors moved their money out of higher-yielding assets and into the safety of the lower-yielding Euro and Japanese Yen.

The surprise news also rattled gold traders who seemed to be content with holding the market in a range until after the election on November 8. Gold prices spiked to the upside, hitting their highest level since October 4 when it reached a high of $1285.40, before settling back to $1276.00 into the close.

The major news services will be probing this story all week-end so it is likely we will know more about the severity of the situation by Monday morning. As of Friday’s close, investors had taken preliminary protection against the possibility of some very bearish news in some markets like the Mexican Peso and gold.

Think About Seeking Shelter

However, with the events leading up to and after the Brexit vote, still on the minds of traders, we may see some excessive volatility in the major markets next week as investors may have to make dramatic moves in an effort to protect their assets against a possible Trump victory.