Liquidity was thin today as markets in Singapore, Hong Kong and London were closed for holiday, and the main piece of news coming in overnight was not financial, but the killing of Osama bin Laden.
How did the market react to such news? The USD gained against its key rivals, but it gave back its gains against the EUR, and partially the GBP, while maintaining its move versus the JPY. Equity markets were generally positive helping to give the market an initial sense of risk appetite to start the week (though with a stiffer USD). Oil prices receded on the news.
It’s hard to judge what the impact of this development will be, but its likely to feed a sense that the mission in Afghanistan is closer to being accomplished, and that it could mean the quicker winding down of US troops there. If that was to pass, that would ease some of the financial burden on the military, and could help the US to spend less on its wars, helping to trim deficit spending. However, bin Laden had no longer much of an operational role within Al-Quada so it remains to be seen how much difference there will be from a military standpoint.
Chief Market Analyst
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