Thickening the drama around this week’s economic calendar are political developments in both the U.S. and the U.K. In the U.K., BoE Governor Mark Carney’s future at the head of the bank has come into question in response to mounting political pressure post-Brexit. And in the United States, another scandal with a Presidential nominee has raised numerous questions about the trajectory of upcoming elections, which are set to take place just a little over a week from today.

So, while many traders were already expecting this week to be prone to volatility, recent developments for each of the above political situations could magnify those risks significantly. With such risk factors flaring, we’ll often see a response of risk aversion across markets. This means lower liquidity, and when we have lower liquidity, this can make price movements sharper as there are fewer sitting orders in the market to serve as a ‘buffer’ to offset rising or falling prices.

Below, we look at three markets that are likely to see significant volatility this week.

Gold

One of the initial responses to news of yet another Federal Investigation (or the old investigation being re-opened, more accurately) was US Dollar weakness. This led many to make the connection that one particular Presidential candidate was Dollar-negative while the other was USD-positive.

Be careful with that…

The likely explanation for Friday’s price action in the Greenback is simply that something unexpected happened. Markets do not like uncertainty. Uncertainty is risk. And if risk isn’t compensated with potential reward, it makes no sense to take that risk. So when something new happens (i.e., a risk), institutional traders need to take notice. Given that USD-strength has been building throughout October as investors got more comfortable with the idea that the Fed might be raising rates in December, this introduction of a new, fresh risk factor of this re-opened investigation could’ve been enough to stymie that theme of USD-strength on the back of higher rate expectations. This doesn’t mean that it will be a lasting theme nor does it denote how much continuation potential could be behind it: It simply means something new happened and needs to be watched for further development.