The devastation caused by Hurricane Sandy has not yet been tallied in its entirety; in addition to those who lost their lives and their houses, there are those who still haven't returned home to assess the damage. In addition to destruction of personal property, the public landmarks, transportation systems and foliage that was destroyed is nearly incalculable. Except, of course, that the financial losses of the storm will be computed and recorded as accurately as possible. The question remains, however, about the economic turmoil that Hurricane Sandy has wrought on those who don't live on the East Coast of the United States. How has Sandy affected the USD and the currency markets in general? How will it continue to affect them?
Trading in Europe came was cut by more than 50 percent on Monday, with less than 1 billion Euros being traded in Paris, and fewer than 2 billion Euros traded in Frankfurt. These low trade volumes neared the all-time low set in December 2011, and a second day of closures did little to ease the nerves. It is hardly surprising that stocks and sectors related to the devastation were especially hard-hit, with sweeping losses in the transportation, insurance and logistics industries.
On the flip side, some economists are predicting that while immediate drops in the market were distressing, they were entirely expected, and that there may be some positive growth coming out of the storm. Analysts are already attempting to evaluate how much money will be pumped into the economy to rebuild that which was destroyed, and should these numbers could theoretically have a positive effect. More likely, however, is that such investments will serve only to minimize the trauma brought upon the United States' Q4, which will hopefully curtail the volatility of the currency markets.
Combine Hurricane Sandy with the expected NFP report coming tomorrow, continued tensions about the oil markets following the storm, and the US presidential election only days away, you can expect the markets to remain volatile. Keep an eye on the commodities markets in addition to the currency markets if you don't already, as the connection between the two is likely to be highlighted in the coming sessions.