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New FBI probe of Clinton emails to weigh on stocks, dollar

The surprise letter from FBI Director James Comey to the US Congress late last week, which was almost immediately made public by congressional staff members, sent a shockwave through the markets in afternoon trading on Friday. The letter outlined a new investigation into Democratic Presidential Nominee Hillary Clinton's emails during her tenure as US Secretary of State. As a result of this news, stocks took a quick dive along with the US dollar while safe-haven gold prices spiked, as markets that were previously complacent on the increasing likelihood of a Clinton victory became quite a bit more uncertain.

The new probe by the Federal Bureau of Investigation has placed the US political landscape in disarray only slightly more than a week ahead of the presidential election, and the markets have responded accordingly. The new investigation is reported to have been sparked by an initial review of hundreds of thousands of emails from former Congressman Anthony Weiner's laptop. Wiener is under FBI investigation for alleged improper communications with a minor, and is also the husband of top Clinton aide Huma Abedin. FBI director Comey wrote in the letter to Congress that the Bureau would be looking into Clinton's emails found on Wiener's laptop to see if they contained any classified information in connection with Clinton's highly-publicized private email server.

On Friday and over the weekend, Clinton's campaign immediately went into damage control mode, blasting the "unprecedented" timing of Comey's letter and downplaying the possibly incriminating contents of those emails. At the same time, Republican Presidential Nominee Donald Trump wasted no time in seizing the opportunity to attack Clinton, insisting that her deceit should preclude her from the presidency.

As for the immediate political fallout, one poll released by ABC News and the Washington Post on Sunday saw Clinton now leading only by one point at 46% to Trump's 45%. CNN's poll of polls, however, still saw Clinton at 47% to Trump's 42%. While this may still represent a comfortable lead for the time being, it is by no means insurmountable, given the potential severity of the investigation.

Depending on how political developments play out in the week ahead, amid a slew of major economic releases and events that include the critical Federal Reserve meeting on Wednesday, financial markets are likely to see significantly heightened volatility in the coming days that stem from both political and economic triggers. This especially pertains to stock markets and the US dollar, both of which could be further pressured if Clinton's campaign is damaged even more by developments in the FBI probe and if a Trump victory becomes an increasingly likelier outcome. In contrast, gold could continue to rebound as its safe-haven appeal rises while the dollar falls.

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