CFD Markets News and Forecasts — 04-11-2024

The final reading of Australia's Judo Bank Services Purchasing Managers Index (PMI) improved to 51.0 in October from 50.6 in the previous reading. This figure was above the market consensus of 50.6, the latest data published by Judo Bank and S&P Global showed on Tuesday.

The Composite PMI climbed to 50.2 in October versus 49.8 prior.  

Market reaction

At the press time, the AUD/USD pair was up 0.03% on the day to trade at 0.6585. 

• EUR/USD remains firmer around 1.0880 in Tuesday’s early Asian session. 
• The outcome of the US presidential election and the Fed rate decision will be the highlights for this week.  
• A slew of Eurozone economic data dampens the hope of large rate cuts by  the ECB in December.

The EUR/USD pair trades with mild gains near 1.0880 during the early Asian session on Tuesday. The US Dollar (USD) edges lower as traders brace for the outcome of the US presidential election and a likely interest rate cut from the Federal Reserve (Fed), which supports some support for the major pair. 

Democratic candidate Kamala Harris and Republican Donald Trump remain almost tied in opinion polls, and the results will be announced for days after voting ends. "The polls suggesting that Harris may have her nose in front in a couple of swing states is causing a bit of profit-taking in the Trump trade,” noted Kenneth Broux, head of corporate research FX and rates at Societe Generale.

Furthermore, the rising expectation that the Fed will cut the interest rate at its November meeting drags the Greenback lower. The US central bank is widely anticipated to cut rates by the usual 25 basis points (bps) on Thursday, rather than the outsized half-point easing of its last decision. According to CME's FedWatch tool, financial markets are now pricing in nearly a 98% odds of a quarter-point reduction and a near 80% chance of a similar-sized move in December.

Across the pond, the Euro gathers strength as the recent Eurozone economic data has diminished expectations for the European Central Bank (ECB) to lower larger interest rates in December. Money markets are currently pricing in a 34 bps rate cut, down from a 42 bps reduction the previous day, indicating that the odds of a deeper 0.5% reduction are diminishing. During the October meeting, the central bank reiterated its commitment to a "data-dependent and meeting-by-meeting" approach to future policy decisions. However, the Eurozone November inflation report might offer some hints about the ECB interest rate outlook. 
 

• Gold prices stabilize, with year-to-date gains exceeding 30% amid market turbulence.
• US Treasury yields dip; USD weakens as investors await Fed's 25 bps rate cut.
• Analysts suggest a Trump victory could boost gold further due to inflation concerns.

Gold prices remained choppy during Monday’s session as the US presidential election continued amid uncertainty about who would win the White House. Additionally, this week, the US Federal Reserve (Fed) is expected to lower rates at the November 6-7 meeting.

The XAU/USD trades at $2,736, virtually unchanged. Yields in the US 10-year benchmark note have fallen eight basis points, after hitting 4.388% last week, sitting at 4.30% at the time of writing. In the meantime, the Greenback, as measured by the US Dollar Index (DXY) performance, tumbled over 0.40%, down to 103.90.

Wall Street is focused on the outcome of the US presidential election. Opinion polls show Democratic candidate Kamala Harris and Republican Donald Trump in a technical tie. A Reuters poll showed concerns that the US could face a similar election crisis post-Trump’s 2020 election defeat.

By Thursday, the Federal Reserve is expected to lower borrowing costs by 25 basis points to the 4.50%-4.75% range. October’s US economic data revealed that the US jobs market remains solid, lowering the odds of the US hitting a recession.

Analysts at TD Securities said “If Trump wins, I think, Gold does well here. We're probably worried a little bit more about inflation with all the tariffs that he's talking about.” Bullion is a hedge in tough and uncertain economic and political times.

The golden metal has enjoyed a rally of over 30% in 2024, and has recorded all-time highs, which sits at $2,790 at the time of writing.

Daily Digest Market Movers: Gold price consolidates amid US Presidential election

• The US Census Bureau reported that US factory orders in September contracted by -0.5%, slightly more than the expected -0.4%, but there was an improvement over August's -0.8% decline.
• Last week’s rising US inflation and dismal jobs report raised the chances of the Federal Reserve reducing rates in 0.25% chunk sizes.
• The Federal Open Market Committee (FOMC) is anticipated to cut rates by 25 bps at its November 7 meeting.
• Data from the Chicago Board of Trade, based on the December fed funds rate futures contract, indicates that investors are pricing in 50 basis points (bps) of Fed easing by the end of the year.

XAU/USD Technical Outlook: Gold price retreats below $2,750 as bulls take a breather

Gold prices remain consolidated. The XAU/USD fluctuated between $2,730 and $2,748 during the trading day, with no catalyst for moving it outside of those boundaries.

Momentum remains bullish, as depicted by the Relative Strength Index (RSI), though buyers seem to have lost a step as the RSI edges lower in bullish territory.

Gold buyers need to reclaim the psychological $2,750 figure for a bullish continuation. Once cleared, the next stop would be the record high at $2,790. Conversely, if XAU/USD registers a daily close below $2,750, further weakness lies ahead.

The first support would be the October 23 low at $2,708. Once surpassed, the next stop would be $2,700, followed by the September 26 swing high, which turned support at $2,685, and by the 50-day Simple Moving Average (SMA) at $2,628.

• Australia’s benchmark interest rate is set to stay unchanged at 4.35% in November.
• The focus remains on Reserve Bank of Australia Governor Michele Bullock’s comments and updated economic forecasts.
• The Australian Dollar could wilt if RBA Governor Bullock ramps up bets for a December rate cut.

The Reserve Bank of Australia (RBA) is expected to sit tight yet again on its monetary policy, extending the pause into the eighth straight meeting on Tuesday.

The RBA is set to maintain the Official Cash Rate (OCR) at 4.35% after its November policy meeting. The decision will be announced at 03:30 GMT, followed by Governor Michele Bullock’s press conference at 04:30 GMT.

Reserve Bank of Australia to stand pat again

With a no-rate change decision fully priced in this month, the market’s attention will be on the RBA’s updated economic forecasts and Governor Michele Bullock’s press conference for fresh hints on the timings of the central bank’s first interest rate cut since its post-covid tightening cycle.

Sticky underlying inflation and tight labor market conditions continue to back the case for a cautious stance by the Australian central bank.

The RBA’s preferred inflation gauge, the annual Trimmed Mean Consumer Price Index (CPI), slowed to 3.5% from 4.0% in the third quarter but stayed above the Bank’s 2%-3% target. The service-sector inflation also remained elevated.

Additionally, the RBA’s annual report, published on October 25, reiterated that inflation would not be sustainable within the 2%-3% target for ‘another year or two’. 

Meanwhile, the Australian economy added 64,100 jobs in September, beating the estimated net gain of 25,000 jobs. Of the new jobs created in September, 51,600 were full-time roles. The Unemployment Rate stood unchanged at 4.1% in September, against the forecast of an increase to 4.2%.

These data points potentially rule out any policy change this week and for the rest of this year. Markets are currently pricing in less than 20% probability of a Christmas rate cut by 25 bps, according to BBH analysts. 

Previewing the RBA policy decision, analysts at TD Securities (TDS) said: “The RBA is unlikely to debate the case for hiking but we don't believe the forecasts to reveal the Bank is considering cuts over coming months either. For now, we stick to May 2025 as the first RBA cut.”

How will the RBA interest rate decision impact AUD/USD?

The Australian Dollar (AUD) is moving away from its lowest level in two months against the US Dollar (USD) in the lead-up to the RBA announcements. Will the central bank provide extra legs to the AUD/USD recovery?

The ongoing upswing could continue if the RBA repeats that “the Board is not ruling anything in or out,’ while acknowledging upside risks to inflation. Thus, the Bank’s prudent approach is expected to drive AUD/USD back toward 0.6700.

Conversely, the pair could witness a sharp sell-off toward 0.6500 in case RBA Governor Michele Bullock says in her post-meeting press conference that the Board discussed cutting rates as an option at the meeting.

Dhwani Mehta, Asian Session Lead Analyst at FXStreet, notes key technicals for trading AUD/USD on the policy outcome. “AUD/USD has come up for air, testing the 200-day Simple Moving Average (SMA) ahead of the RBA decision. The 14-day Relative Strength Index (RSI) rebounds sharply but remains below the 50 level, currently near 41, keeping sellers hopeful.” 

“Buyers need acceptance above the 200-day SMA at 0.6629 for a sustained recovery. The next topside barriers are seen at the 0.6700 threshold and the 50-day SMA at 0.6730. On the flip side, a renewed decline could test the two-month low of 0.6537, below which the 0.6500 level will offer some respite to buyers. Further south, the August 6 low of 0.6472 will come into play,” Dhwani adds.

• NZD/JPY extended its decline on Monday, dropping to 90.90.
• Technical indicators suggest a bearish outlook, with increasing selling pressure and a declining RSI.
• The 20-day SMA is the last barrier against the sellers.

The NZD/JPY’s recent sideways movement seems to be ending, as the pair resumed its decline and fell slightly below the 20-day Simple Moving Average (SMA), below 91.00 on Monday. 

The Moving Average Convergence Divergence (MACD) indicator shows rising red bars, indicating increasing bearish momentum while the Relative Strength Index (RSI) is below 50, with a declining slope, also suggesting a bearish outlook.

The selling pressure is likely to continue, with potential support levels at 90.50, 90.00, and 89.50. If the pair breaks below 90.50, it could signal further decline. On the other hand, a close above 91.50 resistance could indicate a trend reversal. However, the overall outlook remains bearish, as the MACD and RSI indicators suggest strong selling pressure. In addition, the 100-day SMA is looming near the 20-day average and in case of completing a bearish crossover more selling pressure should be expected.

NZD/JPY daily chart

• Mexican Peso strengthens despite weak domestic data; Gross Fixed Investment hits lowest level since February 2021.
• Mexican Supreme Court set to discuss judicial election proposal amid political tensions.
• Trump’s tariff threat and Fed's potential rate cut add to Peso’s volatility.

The Mexican Peso appreciates against the Greenback during the North American session, posting gains of over 0.70% amidst uncertainty in the outcome of the US presidential election. Data from Mexico showed that Gross Fixed Investment plummeted sharply, while Factory Orders in the United States (US) improved but remained in contractionary territory. The USD/MXN trades at 20.12 after hitting a daily high of 20.16.

August’s Gross Fixed Investment in Mexico plunged to its lowest level since February 2021, blamed on lower construction investment and a sharp decline in non-residential construction. In the meantime, the Instituto Nacional de Estadistica Geografia e Informatica (INEGI) is expected to announce October’s inflation data, which is expected to moderate further, according to a Reuters poll.

Aside from this, on November 5, Mexico’s Supreme Court will begin discussing a proposal by Supreme Court Judge Juan Luis González Alcántara Carranca. According to The New York Times, his proposal is simple: “Contenders for the Supreme Court and other top courts would have to stand for election. But thousands of other judges, appointed based on years of training, would remain in their jobs.”

Meanwhile, Mexican President Claudia Sheinbaum said she would wait to see how the judges vote, though she added, “I was elected by the people of Mexico, and eight ministers cannot be above the people.”

The Mexican currency would likely remain weighed down by domestic political turmoil and the result of the US presidential election. Recently, the Republican candidate, former President Donald Trump, said he would impose 25% tariffs on all imports from Mexico if the current government fails to attack the drug cartels and stop immigration from Central and South America.

US Factory Orders contracted in September for the second straight month, yet they improved compared to August’s figures.

USD/MXN traders await the Federal Reserve’s (Fed) monetary policy decision on November 6-7, in which the Fed is expected to lower borrowing costs by 25 bps. After that, Fed Chairman Jerome Powell's press conference would be scrutinized by investors looking for cues on the Fed’s policy path.

Daily digest market movers: Mexican Peso shrugs off US election woes

• The USD/MXN remains adrift from political turmoil in Mexico after the approval of the controversial judiciary reform.
• Mexico’s Gross Fixed Investment (GFI) plunged -1.9% MoM in August, down from July’s 1.8% expansion. On an annual basis, investment dropped -1.9% for the same period, slumped from 6.4%.
• On November 7, Mexico’s Inflation Rate for October is expected to rise from 4.58% YoY to 4.72% YoY. The core Inflation Rate for the same period is estimated to dip from 3.91% to 3.86%.
• The US Census Bureau announced that US Factory Orders in September shrank -0.5% more than expected at -0.4% yet improved compared to August’s -0.8% fall.
• Even though last week’s US Nonfarm Payrolls report was dismal, traders remain skeptical the Federal Reserve would cut rates by more than 25 basis points.
• The Federal Open Market Committee (FOMC) is expected to cut rates by 25 bps on November 7.
• Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 50 bps of Fed easing by the end of the year.

USD/MXN technical outlook: Mexican Peso climbs as USD/MXN drops below 20.20

The USD/MXN uptrend remains intact, even though sellers moved in during the day. If they want to drive price action lower, they must reclaim the 20.00 figure, which would pave the way for further downside. In that outcome, the pair’s first support would be the October 24 daily low of 19.74, ahead of the 50-day Simple Moving Average (SMA) at 19.66. Once those levels are surpassed, the next support would be the October 4 cycle low of 19.10.

Conversely, if USD/MXN resumes its uptrend, the first resistance would be the November 1 high at 20.29. A breach of the latter will expose the 20.50 figure, followed by the September 28, 2022 high at 20.57 and the August 2, 2022 peak at 20.82. Once surpassed, the next stop would be March 8, 2022 swing high at 21.46.

• AUD/USD surges higher in light of hawkish RBA and uncertainty over US election.
• US Dollar weakens on speculation of Kamala Harris victory and Fed's dovish rate cut bets.
• US Nonfarm Payrolls disappointed, missing estimates and casting doubt on Fed's aggressive rate cut path.

The AUD/USD surged higher on Monday, rising by 0.70% to 0.6600 amid expectations of a hawkish Reserve Bank of Australia (RBA) policy decision and uncertainty surrounding the US presidential election.

Recently, the AUD/USD has declined due to a US Dollar recovery and concerns over China's economy. The RBA is expected to maintain a hawkish stance, supporting the AUD in the long term. Market expectations for an RBA rate cut are low, while investors are confident of interest rate cuts by the Federal Reserve (Fed) later this week and again in December.

Daily digest market movers: Australian Dollar rises with US election in sight

• The US Dollar (USD) fell on Monday as polls suggested a tight race between Vice President Kamala Harris and former President Donald Trump in Iowa.
• A Trump victory could boost the USD due to expected protectionist policies and higher inflation.
• A Harris win would likely continue current policies, benefiting riskier currencies.
• The Fed is expected to cut interest rates by 25 basis points (bps) on Thursday, influencing the USD.
• On the other hand, the RBA is expected to hold interest rates steady.
• The RBA’s outlook on economic activity and inflation will also be closely watched as Australian reports recently showed mixed signs but with inflation still above the bank’s target.

AUD/USD technical outlook: Bullish signs emerge, pair might have hit bottom

The Relative Strength Index (RSI) is in the negative area at 41, but the RSI slope is rising sharply, suggesting that buying pressure is picking up the pace. On the other hand, the Moving Average Convergence Divergence (MACD) is flat and red, indicating that selling pressure is weakening.

The AUD/USD pair has resumed its upward trajectory, driven by a recovery in technical indicators from oversold levels. This recovery suggests that the recent sell-off may have been excessive and that buyers are re-entering the market. The pair had previously hit its lowest point since August, indicating that the downtrend may be losing momentum.

The unwinding of a big chunk of the “Trump trade” hurt the US Dollar at the beginning of the week amidst marginal developments in US yields and rising caution ahead of Tuesday’s US election and Thursday’s FOMC gathering.

Here is what you need to know on Tuesday, November 5:

The US Dollar Index (DXY) broke below the 104.00 support and reached new two-week lows amidst rising prudence ahead of the US election on Tuesday. Next on tap on the US docket will be the ISM Services PMI, the final S&P Global Services PMI, and the API’s weekly report on US crude oil inventories.

EUR/USD advanced further north of the 1.0900 barrier, although that initial impulse fizzled out as the NA session drew to a close on Monday. The ECB’s Lagarde and Schnabel are due to speak.

GBP/USD added to Friday’s uptick on the back of the weaker Greenback, although spot faltered just ahead of the key 1.3000 milestone. The BRC Retail Sales Monitor is due seconded by New Car Sales, and the final S&P Global Services PMI.

USD/JPY traded with marked losses, coming all the way down to retest the key 200-day SMA in the mid-151.00s. Next of note on the Japanese calendar will be the release of the BoJ Minutes and the final Jibun Bank Services PMI on October 6.

AUD/USD climbed to multi-day peaks and reclaimed the 0.6600 barrier and beyond, coming in just short of the key 200-day SMA. The RBA’s interest rate decision will take centre stage in Oz.

In quite a promising start to the week, prices of WTI rose past the $71.00 mark per barrel, or two-week highs, following the OPEC+’s decision to postpone its planned oil output increases in December.

Prices of Gold rose modestly and remained close to the $2,750 mark per ounce troy following the offered bias in the US Dollar as well as the absence of direction in US yields. Same performance saw Silver prices reverse three daily pullbacks in a row and approach the key $33.00 mark per ounce.

• US Dollar declines after increased probability of VP Kamala Harris winning the Pennsylvania vote.
• NFP in the US rose by 12,000 in October on Friday, starkly missing expectations.
• Markets fully price in a 25 bps cut at Friday’s FOMC decision and 85% chance of another cut in December.

The US Dollar (DXY), which measures the value of the USD against a basket of six currencies, fell to a fresh nine-day low on Monday after polls showed Vice President Kamala Harris taking the lead in the US presidential election. The drop marks a reversal of the USD's recent strength, which had been driven by expectations of a Donald Trump victory and strong economic data.

The US Dollar has faced temporary setbacks due to profit-taking but has rebounded, consolidating near 104.00. The upcoming Federal Reserve (Fed) decision on Friday, as well as the outcome of the US election, is expected to influence the DXY's direction, with markets pricing in a 25-basis-point rate cut.

Daily digest market movers: US Dollar declines amidst presidential election volatility, markets digest NFP

• The disappointing Nonfarm Payrolls report of 12,000 net new jobs in October despite a consensus estimate of 113,000 triggered a decline in the US Dollar.
• The Unemployment Rate remained unchanged at 4.1%, while the Labor Force Participation Rate inched down to 62.6%.
• The Average Hourly Earnings increased to 4% YoY from 3.9%, suggesting continued wage inflation.
• The robust Services PMI, which rose to 54.9 from 51.5, contradicted the weak NFP data.
• Markets expect a 25 bps cut from the Fed next week and another 25 bps cut in December.
• No Fed speakers are scheduled this week due to the media blackout before the FOMC meeting.
• Bets on a Donald Trump victory in the presidential election, expected to lead to inflationary policies, also supported the US Dollar in the last several sessions, but weekend polls showing rising odds in favor of Kamala Harris have triggered a decline.

DXY technical outlook: DXY consolidates under 104.00 bearish momentum seen

The DXY index continues consolidating around the 103.70 level. The Relative Strength Index (RSI) points downward, escaping overbought territory, while the Moving Average Convergence Divergence (MACD) prints lower green bars.

Key support levels to watch are 103.50, 103.30 and 103.00, while resistance levels are 104.00, 104.50, and 105.00.

• Poll volatility keeps Wall Street cautious; VIX rises above 20.
• Nvidia to replace Intel, Sherwin-Williams to replace Dow in DJIA on November 8.
• Factory Orders drop more than expected.

The Dow Jones Industrial Average (DJIA) fell over 0.29% or 100 points in early trading during the North American session on Monday. The financial markets are expected to remain volatile this week as the US presidential election remains a tight race, and swings in the polls on Monday and Tuesday could spur volatility.

Elections in the United States are driving price action in the financial markets. Recent polls suggest that Democrat Vice President Kamala Harris and Republican former President Donald Trump are in a very close race to occupy the White House from 2024 to 2028. Consequently, Wall Street trades in the red, while the CBOE Volatility Index (VIX) rises above 20.00, an indication of increasing jitters.

In the meantime, US Treasury yields along the belly to the long end of the curve post losses, while the Greenback, as measured by the US Dollar Index (DXY), plunges 0.47% down to 103.84.

The US Census Bureau revealed that Factory Orders in September dropped -0.5% MoM, more than estimates of a -0.4% shrinkage but improved compared to August’s -0.8% contraction. The  US election and Thursday’s Federal Open Market Committee (FOMC) monetary policy decision overshadowed the data. The FOMC is expected to lower rates by 25 basis points (bps), and it will be followed by a press conference by Federal Reserve (Fed) Chair Jerome Powell.

The CME FedWatch Tool shows odds for a 25 bps rate cut by the Fed reaching 98%. This would leave rates in the 4.50%-4.75% range.

In addition to the above-mentioned events, the US economic docket will be busy with the release of the Balance of Trade, S&P and ISM Services PMIs, Initial Jobless Claims, and the University of Michigan (UoM) Consumer Sentiment.

Dow Jones news

In breaking news, Nvidia (NVDA) will replace Intel (INTC) in the Dow Jones. Index owner S&P writes, this change would “ensure a more representative exposure to the semiconductors industry.” In the same statement, S&P Dow Jones announced that Sherwin Williams (SHW) would replace Dow (DOW) in the materials sector. S&P revealed that the changes would be effective before the opening on Friday, November 8.

After the news broke, NVDA shares rose by 2%, while INTC tumbled over 4%. Shares of SHW jumped over 4% on news.

The Dow Jones stocks leading the pack are Home Depot (HD), which gained 0.50% to $394.55, followed by Boeing (BA), which was up 0.25% at $154.98, and Walmart (WMT), up a minimal 0.17% at $82.33. The main losers amid a dismal session for the DJIA were Intel, which was down 4.33% at $22.20, Dow, which lost 2.75% at $47.63, and UnitedHealth Group (UNH), which was down 1.66% at $558.15.

Dow Jones price forecast

The Dow Jones Industrial Average has fallen below the 42,000 threshold after hitting a two-day peak of 42,328. On its way down, the DJIA surpassed the 50-day Simple Moving Average (SMA) at 41,953, opening the door for further downside.

If the Dow Jones achieves a daily close below 42,000, sellers could push the index toward the August 30 high turned support at 41,574. On further weakness, the next stop would be the September 2 high turned support at 41,564, ahead of the 41,000 area.

If the Dow Jones posts a daily close above 42,000 buyers, it could remain hopeful of challenging the October 30 low, which turned resistance at 42,122. Once cleared, the next stop would be the October 31 high 42,460. On further strength, 42,500 could be reached before testing 43,000.

Oscillators point downward with the Relative Strength Index (RSI) preparing to push deeper into bearish territory but with enough room before turning oversold. Therefore, the DJIA path of least resistance is tilted to the downside.

Dow Jones daily chart

• The EUR/GBP currency pair continues to trade sideways between the 20 and 100-day SMA .
•  RSI indicates recovering buying pressure and the MACD is green.
• Sellers breathe, after last Friday’s sharp losses.

In Monday's session, the EUR/GBP pair rose by 0.20% to 0.8395. While the pair remains in a sideways trend, the bullish pressure has shown signs of softening in the last sessions. For the short term, there are signs of a side-ways trade period after last Friday;s 0.60% losses.

The Relative Strength Index (RSI) is currently at 55, indicating that buying pressure is gradually increasing. However, the RSI has recently declined sharply, suggesting that buying pressure is easing. The Moving Average Convergence Divergence (MACD) histogram is flat and green, indicating that buying pressure is steady.

The overall technical outlook for the EUR/GBP is neutral to slightly bullish. The pair is likely to continue trading within the 0.8350-0.8450 (20 and 100-day Simple Moving Averages) range in the near term. However, the recent softening of the bullish trend suggests that the pair may be due for a correction lower which could be triggered if the bulls fail to defend the 20-day SMA.

EUR/GBP daily chart

• GBP/JPY may have reversed trend following the steep decline on October 31. 
• More downside will likely find support at major moving averages, momentum is bearish. 

GBP/JPY rose up after breaking out of the Right-Angle Triangle it formed during October and reached the minimum price expectation for price pattern, at 199.59, the 61.8% Fibonacci extension of the height of the Triangle at its widest point, higher (blue-shaded rectangle). 

GBP/JPY 4-hour Chart 

GBP/JPY was in an established short and medium term uptrend as it rose following the break out, however, since the sell-off of October 31, the short-term trend might have reversed. If the short-term trend has changed, it will suggest the bias is to the downside given the technical analysis dictum that “the trend is your friend”. Indeed it is possible the trend may have already reversed and prices could be biased to going lower. If so, now would be the ideal time to enter a low risk short position.  

A break below 195.37 would supply added confirmation and likely see a sell-off down to a target at 194.11 and the 200-day Simple Moving Average (SMA) (not shown) followed by 192.64 and the 50-day SMA (also not shown). These heavy-duty SMAs, however, are likely to provide support to falling prices. 

The blue Moving Average Convergence Divergence (MACD) momentum indicator line has crossed below the red signal line and also below the zero level, and taken together these are  bearish signs.  

• EUR/JPY corrects back to the trendline for its bullish advance.
• Given the short and medium-term trends are bullish, the odds favor more upside if certain conditions are met. 

EUR/JPY is pulling back within its short and medium-term uptrend. The pair has fallen to the level of the trendline (dashed line) for the rally since the September lows. Given the trend is bullish and technical analysis theory says “the trend is your friend” the odds favor more upside once the correction completes. 

EUR/JPY Daily Chart 

A break above 166.69 (October 31 high) would probably confirm a continuation higher. 

Resistance at 167.96 (July 30 swing high) could act as a barrier to further upside. The minimum target for the breakout from the range lies at 169.68, the 61.8% Fibonacci extrapolation of the height of the range to the upside (orange-shaded rectangle). 

• GBP/USD approaches 1.3000 but remains capped by 100-day SMA.
• A close above 1.3000 may open path to 1.3042 and higher targets.
• Failure to break resistance could lead to 1.2884 support test and further declines.

The Pound Sterling trimmed some of last week's losses against the Greenback and registered gains of over 0.46% ahead of a busy economic schedule featuring US Presidential Elections. At the time of writing, the GBP/USD trades at 1.2971 after rebounding off daily lows of 1.2945.

GBP/USD Price Forecast: Technical outlook

After falling below September’s 11 swing low of 1.3001, the GBP/USD turned neutral to bearish bias, clearing on its way to the 50-day Simple Moving Average (SMA). During the day, the pair hit a daily high of 1.2998, but they could not crack 1.3000. The 100-day SMA at 1.2979 pulled the exchange rate lower.

For a bullish resumption, buyers must surpass 1.3000. Once cleared, the next stop would be the October 30 high at 1.3042, followed by the October 21 peak at 1.3057 ahead of 1.3100.

Conversely, if GBP/USD achieves a daily close below the 100-day SMA, further weakness could drive the exchange rate toward the November 1 low of 1.2884. A breach of the latter will expose October’s 31 swing low of 1.2843 before testing the 200-day SMA at 1.2809.

GBP/USD Price Chart – Daily

• GBP/CAD weakens over a percent at the open on Monday due to markets still expecting the Bank of England to cut interest rates. 
• This comes despite substantially higher inflation forecast for 2025 due to the government’s autumn Budget. 
• Canadian data improves mildly helping to reduce losses for the currency ahead of BoC meeting on Tuesday when more cuts are expected. 

GBP/CAD, which measures the purchasing power of a single Pound Sterling (GBP) in Canadian Dollars (CAD), trades in the 1.8020s on Monday, about a one percent drop from its closing price on Friday. 

Sterling’s steep decline against the Canadian Dollar over the space of a single weekend is partly due to an easing in the Pound’s volatility following the UK autumn Budget, and glimmers of hope offered by recent Canadian economic data releases, which might show green shoots of renewal after a prolonged period of weakness. 

GBP/CAD fell immediately following the UK Budget on Wednesday as investors sold the Pound due to the increase in government borrowing implied by the Budget. UK government borrowing has already oustripped forecasts by 7 billion (GBP) in the first six months of 2024, according to Reuters, and the Budget will add another 32 billion (GBP) in borrowing per year, according to the Office of Budgetary Responsibility (OBR). 

GBP/CAD Daily Chart 

On Friday, however, GBP/CAD rebounded as the Chancellor and her deputy reassured markets via media interviews of the soundness of their figures, and the Pound recovered.

The OBR forecasts higher inflation due to the Budget, mainly as a result of an increase in the minimum wage and substantial government spending, and this makes it likely the Bank of England (BoE) will need to keep interest rates higher for longer. This, in turn, is positive for the Pound as it increases foreign capital inflows. This contributed to GBP/CAD rallying to a six-week high on Friday. 

On Monday the Pound is falling once again, however, amid continued expectations that although inflation is likely to rise – to 2.6% in 2025 from 1.5% previously, according to the OBR – this will not prevent the BoE from cutting interest rates by 25 basis points (bps) at their meeting on Thursday. Such a cut would be negative for Sterling as it lowers capital inflows. 

The recent weak flow of macroeconomic data for the UK is the reason the BoE is likely tp press ahead with a 0.25% cut to interest rates at its meeting on Thursday. 

“Next week, the BoE meeting will take center stage. Weaker-than-expected data should see the MPC cut by 25 bps.  Still, as a result of the budget, the MPC is likely to maintain its gradual easing message,” said Klaus Baader, Global Chief Economist, Societe Generale, in a note on Friday. 

The Canadian Dollar (CAD) has seen substantial weakness in recent months due to the Bank of Canada (BoC) aggressive easing policy. The BoC has slashed its cash rate from 5.00% in May 2024 to 3.75%. This includes a double-dose 50 bps (0.50%) cut in October. Markets are further betting the BoC might cut by another 50 bps at its meeting on Tuesday. At the same time CAD may gain some support from the view that the worst might be over for the Canadian economy and that after the next interest rate cut the BoC will take a more relaxed approach to easing. 

Canadian data has shown a mild improvement over recent months, arguably because of the timely action taken by the central bank to reduce interest rates. The S&P Global Canada Manufacturing PMI rose to 51.1 in October from 50.4 in the previous month, “the second consecutive expansion in Canadian factory activity after 17 consecutive monthly contractions,” according to Trading Economics. Canadian GDP has shown modest growth over recent months and Small Business Optimism has also bounced. 

That said, not all analysts are optimistic about the outlook for the Canadian economy. 

“We think Friday’s Canadian employment report should tell a familiar story—that the labor market has continued to weaken in October amid slowing hiring demand. Employment is still expected to increase, but not by much. We expect 15,000 jobs were added, but that would again undershoot growth in the labor force and population, and push the unemployment rate back up to 6.6% after a tick lower to 6.5% in September,” says  Nathan Janzen, Assistant Chief Economist at RBC.

A further factor is Crude Oil, which is rebounding from its recent multi-month lows in the $60s (WTI Crude Oil) and is trading back above $70 per barrel again amid OPEC constraints. This impacts demand for CAD because Oil is the country’s largest export. 

All systems are a go with strong tailwinds for the set-up in crude markets in the imminent term, TDS’ Senior Commodity Strategist Daniel Ghali note.

CTAs are being forced to cover shorts with a buying program

“Buried in the election coverage are reports that OPEC+ have agreed to delay their unwind of voluntary production cuts by another month.”

“While we remain skeptical that a delay will be sufficient to halt the bleed in supply risk premia embedded within crude oil prices, the risk of a tit-for-tat escalation in the Middle Eastern conflict continues to rise. While traders have concluded that this chapter in the conflict has ended, this geopolitical equilibrium remains extremely unstable.”

“In response, supply risk premia is building again in support of prices, which alongside a resilient demand environment points to notable tailwinds for prices in the imminent term. In this context, CTAs are being forced to cover shorts with a buying program that could total +8% of algos' max size.”

• Silver price climbs to near $33.00 as traders brace for fierce us Trump-Harris battle.
• Lower US bond yields have prompted a strong recovery in the Silver price.
• The Fed is expected to cut interest rates by 25 bps on Thursday.

Silver price (XAG/USD) soars to near $33.00 in Monday’s North American session. The white metal strengthens as US Treasury yields dive, with investors turning anxious ahead of the United States (US) presidential elections on Tuesday.

10-year US Treasury yields plummet to near 4.27%. Lower yields on interest-bearing assets reduce the opportunity cost of holding an investment in non-yielding assets, such as Silver. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, slumps to near 10.70, the lowest level seen in two weeks.

The uncertainty over US elections deepened after the Des Moines Register/Mediacom Iowa Poll, which showed current Vice President Kamala Harris is up three points on Trump in the state, Reuters reported. This has appeared a major shift in market expectations, which were pointing to Trump’s victory.

This week, investors should be prepared for more volatility that will come from Federal Reserve (Fed) monetary policy, which will be announced on Thursday. According to the CME FedWatch tool, the central bank is widely anticipated to cut interest rates by 25 basis points (bps) to 4.50%-4.75%. This will be the second interest rate cut by the Fed in a row, however, the pace will be slower as policymakers voted a bigger rate cut of 50 bps in September.

Silver technical analysis

Silver price discovers strong buying interest near the key horizontal support plotted from the May 20 high of $32.50 on a daily timeframe, which acted as resistance earlier. The white metal finds a temporary cushion near the 20-day Exponential Moving Average (EMA), which trades at around $32.80.

The 14-day Relative Strength Index (RSI) falls inside the 40.00-60.00 range, suggesting that a bullish momentum is over for now, however, the bullish trend remains intact.

Silver daily chart

• AUD/USD holds onto recovery near 0.6600 with RBA policy and US elections in focus.
• The RBA is expected to leave interest rates unchanged at 4.35%.
• Trump-Harris battle and Fed policy will keep market sentiment on its toes.

The AUD/USD pair clings to gains made in Asian trading hours near the key resistance of 0.6600 in Monday’s North American session. The Aussie pair remains firm ahead of the Reserve Bank of Australia’s (RBA) monetary policy announcement and the United States (US) presidential elections on Tuesday.

The major witnessed strong buying interest in the Asian session as the US Dollar (USD) plunged after the Des Moines Register/Mediacom Iowa Poll pointed to tough competition between current Vice President Kamala Harris and former President Donald Trump. Polls showed Harris up three points against Trump in the state where the latter won in the 2016 and 2020 elections, Reuters reported.

At the time of writing, the US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, is down almost 0.6% near 103.70.

The scenario of Trump’s victory would be favorable for the US Dollar as he is expected to support protectionist policies such as a hike in tariffs on imports and lower taxes, which would prompt upside risks to inflationary pressures. While Harris's victory would signal a continuation of current policies, which would be beneficial for risk-sensitive currencies.

This week, the US Dollar will also be influenced by the Federal Reserve’s (Fed) interest rate decision, which will be announced on Thursday. The Fed is expected to cut interest rates again but at a slower pace of 25 basis points (bps) to 4.50%-4.75%. In September, the Fed started its rate-cut cycle, however, the Fed opted for a larger-than-usual cut of 50 bps.

Meanwhile, the Australian Dollar (AUD) will be influenced by the RBA’s policy in which the central bank will keep its Official Cash Rate (OCR) steady at 4.35%. Investors will pay close attention to RBA Governor Michelle Bullock’s press conference to get cues about when the central bank will pivot to policy normalization.

• The US Dollar drops after Ipsos polls show Vice President Kamala Harris taking the lead as the US presidential election looms. 
• Traders gear up for a very volatile week, with the Fed meeting and the US presidential election as the main drivers.  
• The US Dollar index slides below 104.00 and is looking for support. 

The US Dollar (USD) slides on Monday, opening weaker across the board in Asia, after a final poll publication from ABC News and Ipsos showed Vice President Kamala Harris leading by 49% against 46% for former President Donald Trump. Another element for more US Dollar weakness comes from The New York Times, which released data pointing that Harris is ahead in five of the seven swing states that will determine the outcome of the US presidential election. 

The US economic calendar, meanwhile, needs to be considered as well with a very interesting element ahead this Monday: the Senior Loan Officer Opinion Survey (SLOOS) for the third quarter. The report will tell more on the conditions, supply and demand of loans extended to customers in the US. Loan distribution is a very good leading indicator to sketch how the economy will evolve in the coming weeks and months. 

Daily digest market movers: Polls publications

• On Sunday night, the final poll from ABC News and Ipsos showed Vice President Kamala Harris leading by a 49%-46% edge nationally. The New York Times/Siena survey showed Harris being ahead in five of the seven swing states.
• Factory Orders for September are due at 15:00 GMT. Expectations are for orders to contract by 0.4% against the previous decline of 0.2%.
• The Senior Loan Officer Opinion Survey (SLOOS) for the third quarter will be published at 19:00 GMT. 
• Chinese equities are very happy with the positive Harris polls and have closed in the green on Monday. European equities and US equity futures are still looking for direction.   
• The CME FedWatch Tool is backing a 25 basis point (bps) interest-rate cut on Thursday’s meeting with a 99.7% probability against a marginal 0.3% chance of rates remaining stable.  
• The US 10-year benchmark rate trades at 4.30%, lower than the 4.38% where it closed on Friday.  

US Dollar Index Technical Analysis: Forget all logic

The US Dollar Index (DXY) is set to enter a rough patch of volatility this week, so precautionary measures are needed when trading the US Dollar. Expect to see massive swings, mostly headline driven with even possibly unclear direction and rapid moves days after the election. Bigger levels – such as 102.11 on the downside and 105.53 on the upside – need to be considered as possible outcomes. 

The DXY has given up two key levels on Monday and needs to regain control of those two levels first, before considering recovering toward 105.00 and higher. First up is the 200-day Simple Moving Average (SMA) at 103.84 together with the 104.00 big figure. The second element is the high of last week at 104.63. 

On the downside, the 100-day SMA at 103.12, together with the pivotal level at 103.18 (high from March 12) are the first line of defence. In case of rapid and volatile moves this week, rather look for 101.90 together with the 55-day SMA at 102.11 to consider as a substantial support level. In case that level snaps, an excursion below 101.00 could be possible. 

US Dollar Index: Daily Chart

The Bank of England (BoE) is expected to lower its bank rate by 25 bps to 4.75% on November 7, DBS’ Senior FX Strategist Philip Wee notes.

BOE Governor to address monetary policy

“CPI inflation fell to 1.7% YoY in September, below the 2% target for the first time since Covid. However, core inflation remained high at 3.2% in September. BOE Governor Andrew Bailey should address monetary policy in light of the controversial Budget announced on October 31.”

“While the IMF backed Chancellor Rachel Reeve’s economic plan to boost public investment to drive growth, Moody’s warned that frequent changes to the fiscal rules could erode credibility. The Office for Budget Responsibility (OBR) reckoned the additional spending could provide a short-term lift to growth before crowding out business activity and investment and lifting inflation.”

“Following its knee-jerk sell-off to 1.2844 on the announcement, GBP/USD has stabilized above 1.29 on expectations of cautious BOE rate adjustments.”

Turkey’s current-account balance improved so far, but it is too early to be confident about sustainability. The same holds true for today’s inflation readings, Commerzbank’s FX analyst  Tatha Ghose notes.

Some moderation in Turkish inflation

“On Friday, the Istanbul Chamber of Commerce published its monthly cost of living index, which showed cost of living increasing by 3.64% m/m and 59.1% y/y. The media headlines were that cost of living increase had slowed down to 3.64% m/m. But, at this rate of month-on-month increase, annualised inflation still works out to 53%.”  

“Many commentators view the Istanbul data as a cross-check on the national data: the two used to run close to each other historically, but then diverged after President Tayyip Erdogan made multiple changes to the Stats Office personnel. There’s some moderation in inflation, but nothing policymakers should be getting sanguine about. In fact, the pace of moderation could even be tapering off, which is the big risk scenario.”

“Turkish inflation might moderate to the 30%-40% range rather readily – because a part of the inflation upswing had obviously been globally correlated – but, this could not tell us whether Turkish monetary policy can ultimately tackle the endemic domestic inflation problem or not. One pre-requisite is that no other contradictory policies are implemented which would offset the contractionary impact of tighter monetary policy.”

• Crude Oil opens a gap on Monday, surging above $71.00 in European trading hours. 
• The sharp move comes after OPEC+ has agreed to delay its 180,000 barrels production increase to December. 
• The US Dollar Index is looking for support after polls show slight favor for Harris to win. 

Crude Oil price sprints higher on Monday on the back of an OPEC statement in which the Oil cartel says it has agreed to delay its foreseen production restart until at least December. Previously, the group was set to add 180,000 barrels a day from October but after the announcement, this won’t happen before the end of December, limiting supply excesses for the last few months of 2024.

The US Dollar Index (DXY), which tracks the performance of the Greenback against six other currencies, is dipping on Monday. The main driver is the US presidential election after polls from ABC News/Ipsos showed Vice President Kamala Harris leading by a 49%-46% gap nationally while The New York Times/Siena survey showed Harris ahead in five of the seven swing states.

At the time of writing, Crude Oil (WTI) trades at $71.15 and Brent Crude at $74.86.

Oil news and market movers: Finally some sense

• OPEC+ has pushed back its December production increase by one month, the second delay to its plans to revive supply as prices continue to struggle amid a fragile economic outlook, Bloomberg reports. 
• Most major stock markets in the Gulf region fell in early trade on Monday, following a decision by OPEC+ to delay a planned December oil output increase by one month, Reuters reports.
• Iran has vowed to retaliate against Israel “in full and by all means necessary” after tensions in the region remain simmering, Reuters reports.

Oil Technical Analysis: This could get messy

Crude Oil prices are rallying after OPEC+ has published a brief statement on its website on Sunday saying that it will delay its Oil output increase again by a month. Although that might look like a sound thing to do, it still remains a drop on a hot plate. Whether it will be enough to bring back Oil markets in a well-balanced position between supply and demand remains to be seen. 

On the upside, the 55-day Simple Moving Average (SMA) at $70.92 remains the first level to reclaim and needs to see a daily close. Next up, the hefty technical level at $74.45, with the 100-day Simple Moving Average (SMA) and a few pivotal lines, is possibly the next big hurdle ahead. The 200-day SMA at $76.88 is still quite far off, although it could get tested in case tensions in the Middle East pick up again. 

On the downside, traders need to look much lower at $67.12, a level that supported the price in May and June 2023. In case that level breaks, the 2024 year-to-date low emerges at $64.75 followed by $64.38, the low from 2023.

US WTI Crude Oil: Daily Chart

The official manufacturing PMI edged up to 50.1 in October, the first above-50 reading since April. Retail sales growth likely edged up on policy measures, holidays and online shopping festival boost. CPI inflation may have remained soft; PPI deflation likely moderated as metal prices rebounded m/m. We expect M2 and CNY loan growth to have picked up on liquidity injection, lower lending costs, Standard Chartered’s economists Hunter Chan and Shuang Ding note.

Domestic demand improves

“Retail sales growth likely picked up to 3.5% y/y, with support from the consumer goods trade-in campaign, a m/m increase in home sales, and the holiday boost. Meanwhile, fixed asset investment (FAI) growth may have eased, with the decline in real-estate investment likely intensifying amid falling land transactions.”

“Base effects likely lifted export growth but weighed on import growth. Meanwhile, the PMI survey suggests weaker new export orders and improved imports. We, therefore, expect the monthly trade surplus to have widened. CPI inflation may have stayed at 0.4% y/y, with food prices declining m/m. PPI deflation likely eased as metal and cement prices rebounded.”

“We expect M2 growth to have edged up to 7% y/y as the People’s Bank of China (PBoC) net-injected liquidity through the new outright reverse repurchase operations and net treasury bond purchases. CNY loan outstanding growth likely picked up to 8.2% y/y as loan demand may have increased on lower borrowing costs.” 

The labor market report on Friday had no lasting negative impact on the US dollar. The abysmally low number of new jobs created did not harm the dollar because (a) the unemployment rate did not surprise on the downside and (b) there were enough special effects to explain a downward deviation of the nonfarm payrolls figure, without the US labor market having to be assumed to be in freefall, Commerzbank’s Head of FX and Commodity Research Ulrich Leuchtmann notes.

The key driver is the upcoming US election

“Depending on which of the announcements made by Donald Trump and his cronies are taken seriously, the US economy could soon look quite different if he wins the election. The key driver is therefore tomorrow's US election. The polls published over the weekend have probably shaken the certainty with which some market participants may have bet on Trump's victory. At least the greenback has weakened significantly with and since the start of trading in Asia.”

“In my view, two polls are particularly noteworthy: one by the New York Times, which sees Kamala Harris ahead in North Carolina and Georgia, two states where most polls so far have seen Trump ahead, one, considered a high-quality survey, which sees Harris ahead in Iowa, a state that has so far been largely considered a ‘solid red’ by pollsters. Both surveys show that the supposedly small confidence bands, which suggest a high degree of accuracy in the surveys, may have been taken too seriously by those who believed that a Trump victory is all too likely.”

“The Iowa poll mentioned above, for example, seems to be based primarily on the fact that particular care was taken to capture the voting behavior of female swing voters, the majority of whom are repelled by Trump's family policy. This raises the suspicion that most polls that backed the Trump trade could be subject to a systematic error. The Trump trade appears riskier and is only worthwhile if the risk premium is correspondingly higher, i.e. if the USD is cheaper.”

• EUR/GBP recovers from multi-year lows but then pulls back down. 
• Is the pair about to reverse trend higher or is it still overall bearish?

EUR/GBP gaps higher at the open on Monday and starts climbing again. The pair had been pulling back since the completion of a three-wave, zig-zag-shaped pattern last Thursday. This pattern has been drawn on the chart below with the waves labeled a,b and c. 

EUR/GBP 4-hour Chart 

In the very near-term the pair might fall to fill the open gap left after price jumped higher on Monday. Technical analysis theory argues that gaps have a greater tendency of being closed. 

The abc pattern could be either a correction of the overall downtrend or the start of a new short-term uptrend. 

If it is just a correction, the price will probably continue falling in line with the medium and longer-term downtrend, with a target at the 0.8311 multi-year lows. 

If price manages to break above the high of wave c, however, it will have formed a third higher high, thereby establishing a new sequence of rising peaks and troughs. This is a strong indicator of a new uptrend. Give the technical analysis principle that “the trend is your friend” the odds would then favor further upside to come. 

The steepness of the abc pattern strengthens the case of this being a reversal rather than a correction. 

A failure to pierce above the top of wave c would indicate the pair is probably not reversing.  

It would suggest EUR/GBP will probably remain trapped oscillating within the red and green dashed lines on the chart at 0.8311 and 0.8456 respectively. 

• NZD/USD fails to hold the Asian session’s strength amid persistent weakness in the Kiwi dollar.
• The NZ Unemployment Rate is expected to have risen to 5% in the third quarter of this year.
• This week, investors await the US presidential elections and the Fed’s policy decision.

The NZD/USD pair falls back sharply to near 0.5980 in European trading hours on Monday after a strong opening. The Kiwi pair retreats on persistent weakness in the New Zealand Dollar (NZD) due to expectations that the Reserve Bank of New Zealand (RBNZ) will cut its Official Cast Rate (OCR) again by 50 basis points (bps) on November 27.

On the economic front, investors await the Q3 Employment data, which will be published on Wednesday. Economists expect the Unemployment Rate to have increased to 5.0% from 4.6% in the previous sector. In the same period, the NZ laborforce is estimated to have declined by 0.4%, the similar pace at which it grew in the previous quarter. The Labor Cost Index is expected to have grown by 3.4% year-on-year, slower than 3.6% in the second quarter of this year. Weakening labor market conditions would prompt RBNZ dovish bets.

Meanwhile, the US Dollar (US) remains under pressure as traders brace for the United States (US) presidential elections on Tuesday and the Federal Reserve’s (Fed) policy meeting on Thursday. According to various national polls, there would be fierce competition between Republican candidate Donald Trump and current Vice President Kamala Harris.

On the monetary policy front, investors expect the Fed to cut interest rates again. However, the rate cut size is expected to be 25 bps against 50 bps opted by the Fed in Septeber.

NZD/USD remains well-supported above the 78.6% Fibonacci retracement around 0.5960. The Fibo tool is plotted from the August 5 low at 0.5850 to the September 30 high at 0.6380.

Downward-sloping 20-day Exponential Moving Average (EMA) near 0.6030, suggests that the near-term trend is bearish.

The 14-day Relative Strength Index (RSI) oscillates below 40.00, indicating that a strong bearish momentum is intact.

More downside is highly likely towards the round-level support of 0.5900 and the August 5 low at 0.5850 if the pair decisively breaks below the October 31 low of 0.5940.

On the flip side, a reversal move above 61.8% Fibo retracement near 0.6050 will drive the asset toward the round-level resistance of 0.6100 and the October 8 high of 0.6146.

NZD/USD daily chart

• Gold is up a quarter of a percent at the start of the week as the US Dollar slides lower. 
• Gold, which is priced predominantly in USD, gets a lift from the Trump trade unwinding 
• The US presidential election is too close to call, hedge funds are still long Gold and Iran saber-rattling boosts haven demand. 

Gold (XAU/USD) makes a half-baked recovery to trade in the $2,740s on Monday amid a weakening US Dollar (USD), which helps Gold rise since the precious metal is mostly priced and traded in USD. This, and continued safe-haven demand from geopolitical risk, as well as the effect of long positioning by trend-following hedge funds, are all supporting Gold’s tepid bounce from within a familiar range stretching from around $2,709 to $2,759. 

Gold rises as USD falls on “Trump trade” unwind

Gold gains a lift from a weakening US Dollar (USD) as traders reduce bets that former President Donald Trump will win the US presidential election. The Greenback rose during October as it was expected Trump’s inflationary policies would keep interest rates high in the US, increasing foreign capital inflows.  

However, from the odds favoring a Trump come-back prior to the weekend, these have now moderated to “a coin toss-up”, according to election guru Nate Silver, and this uncertainty is further underpinning Gold price. 

Speculation that the US Federal Reserve (Fed) could slash US interest rates by 50 basis points (bps) (0.50%) after the election, in the event of undue market volatility, as a “picker-upper”, could also be a potential factor supporting Gold price, since lower interest rates make the non-interest paying asset more attractive to investors.  

This, and the news that Iran is planning to mount another attack on Israel in response to last month’s bombings, is adding to the geopolitical risk quotient. On Saturday, Iran's supreme leader, Ayatollah Ali Khamenei, told a student gathering that the US and Israel "will definitely receive a crushing response," according to the BBC. 

Data from futures and options exchanges in the Commitment of Trader (COT) report is pointing to continued large trend-following trades from hedge funds, who have been chasing the rally higher. Whilst there has been a slight increase in shorts, according to Bart Melek, Head of Commodity Strategy at TD Securities, the weight of the trade remains long. 

Technical Analysis: Gold back in a familiar range

Gold is edging higher on Monday from within the confines of its old range, stretching between $2,709 and $2,759. 

Despite the sharp pullback at the end of last week, the precious metal remains in an overall uptrend on all time frames (short, medium and long), which, given the technical principle that “the trend is your friend,” tilts the odds in favor of more upside. 

XAU/USD Daily Chart

A break above the $2,790 all-time high would probably lead to a move up to resistance at $2,800 (whole number and psychological number), followed by $2,850. 

A deeper pullback, on the other hand, would find support at $2,709, the floor of the range. The overall uptrend, however, might well resume thereafter. 

The US Dollar (USD) net long positions have increased. EUR net short positions have increased. GBP net long positions have decreased for the fourth week in a row and JPY positions turned net short for the first time in 11 weeks, Rabobank’s FX analysts Jane Foley and Molly Schwartz note.

USD turns strongest performing G10 currency in October

“USD net long positions have increased, driven by an increase in long positions. USD was the strongest performing G10 currency in October, but its strength ebbed late last week. October NFP registered well-below expectations at only 12k payrolls on Friday, November 1st. This upcoming week is the US presidential election on Tuesday and the FOMC rate cut decision on Thursday. The market is pricing in a 25bp cut.”

“EUR net short positions have increased, driven by an increase in short positions. That said, Eurozone aggregate CPI inflation registered a slightly firmer than expected 2.0% y/y last week. This knocked expectations that the ECB would cut rates by a ‘large’ 50 bps in December.”

“GBP net long positions have decreased for the fourth week in a row, driven by a decrease in long positions. The market is pricing in 79% of a 25bp cut at the November 7th BoE meeting. JPY positions turned net short for the first time in 11 weeks, driven by an increase in short positions. CPI inflation registered in line with expectations at 1.8% y/y. JPY has been the worst performing G10 currency year-to-date and the worst performing G10 currency in October.”

USD/SGD fell, tracking the pullback in USD as Trump trade unwinds. Pair was last at 1.3171, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

USD pulls back as Trump trade unwinds

“Bullish momentum on daily chart faded while RSI eased from near overbought conditions. Support at 1.31 (38.2% fibo), 1.3040 (50 DMA). Resistance at 1.3190 (50% fibo), 1.3290 (61.8% fibo retracement of Jun high to Oct low).”

“S$NEER strengthened; last at 1.62% above model-implied mid.”

The US Dollar (USD) could trade with a downward bias; as momentum is not strong, any decline is unlikely to break clearly below 151.50. In the longer, USD advance from early last month has ended; it must break and remain below 151.05 before a more sustained decline can be expected, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

USD/JPY unlikely to break clearly below 151.50

24-HOUR VIEW: “Our view of USD ‘dropping further’ last Friday was incorrect, as it traded in a volatile manner between 151.77 and 153.09. Although it closed on a strong note at 152.98 (+0.62%), it dropped sharply upon opening today. Despite the choppy price movements, downward momentum has increased somewhat. Today, USD could trade with a downward bias, but momentum is not strong, any decline is unlikely to break clearly below 151.50. The major support at 151.05 is unlikely to come under threat. On the upside, resistance levels are at 152.55 and 153.00.”

1-3 WEEKS VIEW: “We indicated last Friday (01 Nov, spot at 152.05) that ‘The USD advance from early last month has ended.’ We added, ‘downward momentum is beginning to build, but USD has to break and remain below 151.05 before a more sustained decline can be expected.’ The chance of USD breaking clearly below 151.05 will increase in the next few days as long as 153.35 is not breached. We continue to hold the same view.”

USD/JPY fell sharply amid the pullback seen in USD as Trump trade unwinds. Pair was last at 151.95 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

JPY set to continue to regain strength

“Bullish momentum on daily chart faded while RSI fell from near overbought conditions. Near term likely to see further pullback. Support at 151.55 (200 DMA), 150.60/70 levels (50% fibo retracement of Jul high to Sep low, 100 DMA). Resistance at 153.30 (61.8% fibo), 155 and 156.50 (76.4% fibo).”

“Governor Ueda said that the current political situation in Japan wouldn’t stop him from lifting rates if prices and the economy stay in line with BoJ’s forecast. He also made reference to FX rates more likely to affect prices in Japan than before. He also said that similar wage deals next year as this year would be good but there is not much information on next year’s shunto yet. Overall, his remarks were more hawkish than expected and is likely to have paved the way for BoJ hike in Dec, which remains our house view.”

“Recent labour market report also pointed to upward wage pressure in Japan with 1/ jobless rate easing, 2/ job-to-applicant ratio increasing to 1.24 and 3/ even female labour participation rate rose to1.2ppts (vs. a year ago). Japan’s trade union confederation (or Rengo) is again calling for wage increase of 5% or more overall and 6% or more for SMEs for 2025. Wage growth remains intact, alongside broadening services inflation and this is supportive of BoJ normalizing rates while JPY should continue to regain strength.”

• The Mexican Peso pushes higher against the US Dollar on Monday as predictions of a Trump victory in the presidential election give way to doubt. 
• Where could the Peso end up after the election? Four scenarios for the Mexican currency.
• USD/MXN peaked at a new year-to-date high of 20.29 on Friday and then opened a gap down on Monday.  

The Mexican Peso (MXN) trades mixed in its key pairs on Monday. The Peso is rising against the US Dollar (USD) as the “Trump trade” – which has proven positive for the Greenback – fades due to increased doubts about the outcome of the US presidential election. 

The USD is further under pressure as concerns mount that post-election market volatility might encourage the Federal Reserve (Fed) to slash interest rates by another 50 basis points (bps) (0.50%) at its November meeting on Thursday to act as a “tranquilizer”. 

Against the Euro (EUR), however, MXN is edging lower, as the shared currency gains mild support from recent solid Eurozone Unemployment and IFO survey data. Versus the Pound Sterling (GBP), the Peso seesaws between tepid gains and losses as Sterling attempts to reboot after the dust settles after the Autumn government’s budget sell-off.   

USD/MXN is trading at 20.11, EUR/MXN at 21.92, and GBP/MXN at 26.07 at the time of publication. 

Mexican Peso rises against USD as election remains a “coin toss”

The Mexican Peso trades higher against the US Dollar as the US presidential election proves too close to call, and traders unwind bets from a few days ago when the odds favored former President Donald Trump winning the race. 

According to election guru Nate Silver, the election outcome is going to be “a pure coin toss-up,” and his website FiveThirtyEight gives Trump a 53% probability of winning, Vice President Kamala Harris a 46% chance, and a 1% probability of no outright winner. 

Four US presidential election scenarios for the Peso

The number of Mexican Pesos that can be bought with one US Dollar could fluctuate between a low of 18.30 and a high of 22.26 depending on the outcome of the US presidential election, according to Mexican financial daily El Financiero.

The financial news site posits four possible US presidential election scenarios for the USD/MXN pair (graphic below).

In the case of Harris winning the presidency and the Democrats securing a majority in Congress, the Peso is likely to strengthen to between 18.30 and 19.00 against the USD.

In the worst-case scenario of a Trump victory and a Republican majority in Congress, the Peso is likely to fall to between 21.14 and 22.26 to the US Dollar. 

If Kamala Harris wins the presidency without a Democrat majority in Congress, USD/MXN is likely to fluctuate between 19.40 and 18.80. 

A win for Trump without a Republican majority in Congress, however, could see the pair in a range between 21.14 and 19.70. 

Mexican data upbeat

The Mexican Peso is underpinned by relatively positive recent macroeconomic data. 

Mexican Business Confidence improved to 52.3 in October, and the S&P Global Mexican Manufacturing PMI rose to 48.4 in October from 47.3 in the previous month, albeit remaining in contraction territory below 50. The survey showed orders remained low due to fierce competition from China, although it highlighted lower cost pressures, which might feed through into lower inflation.

The Mexican Unemployment rate stood at a relatively low 2.9% in September, unchanged from the corresponding period in the previous year.

As measured by the Gross Domestic Product (GDP) growth rate, the third-quarter economic growth for Mexico came out at 1.0% quarter-on-quarter, accelerating from 0.2% in Q2, and annualized GDP growth rose by 1.5%. 

Banxico expected to cut by 0.25%

Expectations are generally still high for the Banco de Mexico (Banxico) to cut interest rates by 25 bps (0.25%) to 10.25% at their meeting on November 14. This is likely to put pressure on the Mexican Peso as lower interest rates attract less foreign capital inflows. 

According to Kimberley Sperrfechter, Emerging Markets Economist at Capital Economics, Mexico’s surprise GDP growth in Q3 does not “preclude another rate cut in November” by Banxico.  

A rate cut will depend on the path of inflation, and core inflation is likely to remain low, according to Klaus Baader, Global Chief Economist, Societe Generale. 

“In Mexico, the sluggish core disinflation continues amid a weakening economy, and despite significant Peso depreciation,” says Baader in a recent note. 

A further driver of the Peso is remittances from Mexican migrants working abroad, sending money home. These fell by 4.6% in September to $5.36 billion compared to $5.62 billion recorded in the same month last year, according to Banxico. 

Technical Analysis: USD/MXN gaps down at open after peaking on Friday

USD/MXN gaps down (orange shaded rectangle on the chart below) to trade in the 20.11s at the open on Monday, after peaking at 20.29 on Friday.  

The pair appears to have completed a bullish Measured Move, or “abc” pattern (see chart), which began at the October 14 swing low. 

USD/MXN 4-hour Chart 

Despite the gap down, USD/MXN is still probably in an uptrend on a short, medium and long-term basis. Further, it is trading in a bullish rising channel. Given the technical dictum “the trend is your friend,” the odds favor a continuation higher. 

In addition, according to technical analysis theory, gaps do not tend to remain open for long, suggesting the gap that opened on Monday could soon be filled by rising prices. 

That said, momentum, as measured by the Moving Average Convergence Divergence (MACD), remains low by recent standards and indicates a lack of bullish enthusiasm underpinned Friday’s rally to new highs. 

The New Zealand Dollar (NZD) could trade in a choppy manner between 0.5965 and 0.6015. In the longer run, weakness in NZD from early last month has ended; it is likely to trade in a 0.5940/0.6040 range for now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Weakness in NZD from early last month ends

24-HOUR VIEW: “Last Friday, we expected NZD to trade in a range between 0.5950 and 0.5990. NZD then traded in a 0.5960/0.5999 range. It closed at 0.5962 but rose above 0.6000 in early Sydney trade today. The volatile price action has resulted in a mixed outlook. Today, NZD could continue to trade in a choppy manner, probably between 0.5965 and 0.6015.”

1-3 WEEKS VIEW: “We turned negative in NZD early last month. As we tracked the decline, in our most recent narrative from last Wednesday (30 Oct, spot at 0.5970), we indicated that ‘There is still no clear increase in downward momentum and the chance of a sustained break below 0.5950 is not high.’ While NZD subsequently dropped below 0.5950, it rebounded quickly from 0.5940. In early Sydney trade today, it rose to 0.6010. Although our ‘strong resistance’ at 0.6010 has not been clearly breached, downward momentum appears to have faded. In other words, the weakness in NZD has ended. NZD has likely entered a range trading phase and is expected to trade between 0.5940 and 0.6040 for now.”

• USD/CAD rebounds from 1.3900 as the Canadian Dollar weakens on expectations that the BoC will deliver another 50-bps interest rate cut.
• The likelihood of tough competition between Kamala Harris and Donald Trump for presidential elections has weighed on the US Dollar.
• The Fed is expected to cut interest rates by 25 bps on Thursday.

The USD/CAD pair recovers half of its intraday losses after discovering significant buying interest around the key support of 1.3900. The Loonie asset bounces back despite the US Dollar (USD) remaining vulnerable against its major peers, suggesting sheer weakness in the Canadian Dollar (CAD).

The CAD remains on the backfoot as the Bank of Canada (BoC) is expected to cut interest rates further in the last monetary policy meeting of the year in December. BoC Governor Tiff Macklem opened doors for another 50 basis points (bps) interest rate reduction in December.

“We’ve demonstrated we’re prepared to do a 50-basis-points cut if we think that’s appropriate. And if we think it’s appropriate to do it again, we’ll do it again,” Macklem told to Senate Committee on Wednesday. Macklem emphasized the need to lower interest rates unless he sees surprises from economic developments. The BoC also reduced its interest rates by 50 bps to 3.75% in its policy meeting in October.

For more interest rate guidance, investors will pay close attention to BoC's Summary of Deliberations and the minutes of the policy meeting of October, which will be published on Tuesday.

Meanwhile, the US Dollar faces intense selling pressure as recent United States (US) national polls have shown that there would be fierce competition between Democratic candidate Kamala Harris and former President Donald Trump for presidential elections on Tuesday. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, tumbles to near 103.70.

This week, investors will also focus on the Federal Reserve (Fed) policy meeting, which is scheduled on Thursday. The Fed is expected to reduce interest rates by 25 bps to 4.50%-4.75%, according to the CME FedWatch tool.

Friday’s session seemed to signal that some calm has been restored in the gilt market, and that favoured a EUR/GBP decline back below the 0.8400 mark, ING’s FX analyst Francesco Pesole notes.

BoE to announce its policy on Thursday

“Our short-term fair value model shows a rather modest risk premium of around 0.6% in EUR/GBP at the moment. As discussed last week, the pound and gilt markets are unlikely to face a rerun of the post-2022 mini budget crisis, but some gradual repricing higher in gilt yields on the back of wider expected borrowing can still weigh on the pound along the way.”

“On Thursday, the Bank of England announces policy and a 25bp is widely expected. Markets will probably be more interested in hearing what the MPC has to say about last week’s budget. While the Office for Budget Responsibility sees the announced fiscal measures are both pro-growth and inflationary, our UK economist does not expect them to significantly alter the BoE’s view.”

“For now, Governor Andrew Bailey may focus on the recent drop in services inflation and could try to drive the attention away from the budget and back to data. That could be read as a dovish signal for BoE rate expectations, and there is probably room for more easing to be added to the GBP swap curve, which is currently pricing in 32bp over the next two meetings. A dovish repricing can weigh on the pound this week, but should it also come with some lower long-end gilt yields, some inflows into sterling markets can offset selling pressure on GBP.”

Elsewhere in Europe, EUR/NOK tested the 12.0 near-term target, which likely mirrors some deterioration in FX liquidity conditions ahead of the US vote, ING’s FX analyst Francesco Pesole notes.

Krone’s weakness to keep Norges Bank hawkish

“The krone’s weakness will likely keep Norges Bank a hawkish outlier this week, with markets pricing in no risk of a cut at the Thursday meeting.”

“Another development in the Nordics is the Riksbank meeting (also on Thursday). We expect a 50bp in line with consensus and market pricing, and see only a severe post-US election SEK selloff potentially tilting the balance to 25bp.”

The Euro (EUR) continued to drift higher as Trump trade unwound. Pair was last seen at 1.0897 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

EUR faces the risk of a rebound

“Momentum is mild bullish while RSI rose. Resistance here at 1.09 (50% fibo), 1.0940 (100 DMA), 1.0970. Support at 1.0830 (61.8% fibo retracement of 2024 low to high), 1.0760 (recent low).”

“The move higher remains in line with our view that quite a bit of negativity is in the price of EUR following recent dovish rhetoric out of ECB, softer growth/ economic momentum, USD strength and the fear of Trump win and the threat of that 10-20% tariff. But with much negativity in the price, we do caution for the risk of rebound.”

EUR/USD is back up this morning after a rollercoaster ride on Friday as US payrolls were released. This week will all be about the US election with probably very little contribution by the eurozone calendar, ING’s FX analyst Francesco Pesole notes.

Pre-election volatility is dominating

“The US election implications for the euro aren’t only related to the dollar reaction. Markets have scaled back some European Central Bank dovish bets after the latest eurozone growth and inflation numbers, but probably remain open to pricing back in the chance of a 50bp December cut should Trump win this week.”

“The rationale there is that the ECB will be more inclined to frontload easing given the risk of protectionism under Trump. At the moment, markets are pricing in 29bp of easing in December and an additional 30bp in January, which signals some residual bets on outsized cut remaining in place.”

“EUR/USD has briefly traded above 1.0900 this morning on the back of broad-based USD weakness. Pre-election volatility is dominating, but the still-wide rate differentials suggest the pair is expensive at these levels.”

The Australian Dollar (AUD) is likely to trade with an upward bias; any advance is expected to face strong resistance at 0.6620. In the longer run, month-long AUD weakness has stabilised; AUD is expected to trade in a 0.6535/0.6655 range for now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Month-long AUD weakness seems stabilised

24-HOUR VIEW: “We expected AUD to trade in a range between 0.6550 and 0.6600 last Friday. AUD then traded in a narrower range of 0.6554/0.6591, closing at 0.6560. It gapped higher upon opening today. There has been a slight increase in upward momentum, and AUD is likely to trade with an upward bias. However, any advance is expected to face strong resistance at 0.6620. Support is at 0.6570, followed by 0.6555.”

1-3 WEEKS VIEW: “We have held a negative AUD view since early last month. In our most recent narrative from last Wednesday (30 Oct, spot at 0.6565), we pointed out that ‘Although the weakness has not stabilised, given that the current decline is entering its second month, the potential for further sustained weakness may be limited.’ We also pointed out that ‘The next level to monitor is 0.6520, and only a breach of 0.6620 (‘strong resistance’ level) would mean that the weakness in AUD has stabilised.’ AUD gapped higher upon opening today and rose above 0.6600. Although our ‘strong resistance’ level has not been clearly breached, downward momentum has largely faded. To look at it another way, the month-long AUD weakness has stabilised. From here, AUD is expected to trade in range, likely between 0.6535 and 0.6655.”

US election week is starting with a weak dollar across the board. Markets are still digesting the very soft payrolls numbers on Friday, which were highly affected by extreme weather events. Meanwhile, the latest polls suggest that the Democrats have regained some momentum in some swing states may have prompted some unwinding of Trump trades. Incidentally, a recent poll suggests that Kamala Harris is leading in Iowa, previously considered a red-leaning state, ING’s FX analyst Francesco Pesole notes.

US elections and upcoming Fed meeting to shape the market

“Despite some unwinding of Trump trades, asset markets are still broadly pricing in a Trump win. As things stand now, we expect the dollar to sell off if Harris wins, while the impact of a Trump win may depend more on the Congress composition. A Republican clean sweep can send the dollar higher, but probably by less than how much a Harris win could hit USD. The USD might not rally at all if Trump wins but Democrats secure the house.”

“Another big event this week is the Federal Reserve's rate announcement on Wednesday. By then, the election results may have not been called yet, meaning the FOMC market impact could prove rather short-lived. The Fed should cut by 25bp regardless of the US election result. Had it not been for the proximity of the vote, we would have argued a Fed cut would have been net-negative for the dollar, but the implications for FX of this Fed decision will only be assessed once the election volatility has dimmed down.”

“Expect volatility in USD crosses today and tomorrow as FX liquidity may tighten and large hedging positions may be re-assessed on the back of latest sentiment on the vote. Today’s momentum seems to be pointing to a weaker dollar, but things can turn rapidly in intraday trading. We retain a bias for a stronger USD today and tomorrow from this morning levels.”  

The Pound Sterling (GBP) is likely to trade in a range, probably between 1.2890 and 1.2980. In the longer run, GBP must break and remain below 1.2845 before a sustained decline can be expected, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Rangebound between 1.2890 and 1.2980 for the time being

24-HOUR VIEW: “After GBP dropped sharply last Thursday, we highlighted on Friday that ‘The sharp drop appears to be overdone, and GBP is unlikely to weaken further.’ We held the view that GBP ‘is more likely to trade in a range, probably between 1.2860 and 1.2950.’ GBP did not weaken further, but instead of trading in a range, it rose to 1.2980, then pulled back to close at 1.2921. It opened higher today. The price action provides no fresh clues, and we continue to expect GBP to trade in a range, probably between 1.2890 and 1.2980.”

1-3 WEEKS VIEW: “Last Thursday, GBP plummeted to a low of 1.2845. In our update from last Friday (01 Nov, spot at 1.2900), we indicated that ‘While there has been a buildup in momentum, GBP must break and remain below 1.2845 before further sustained decline can be expected.’ We added, ‘The likelihood of GBP breaking clearly below 1.2845 will remain intact, provided that 1.2985 is not breached.’ In NY trade, GBP rose to 1.2980, then pulled back. Downward momentum has slowed, and the chance of GBP breaking below 1.2845 has diminished. However, only a clear break above 1.2985 would indicate that the downside risk has faded.”

The US Dollar (USD) traded choppy last Friday. Payrolls surprised to the downside at +12k jobs (vs. 100k expected, 254k prior) while the 2-month net revision was -112k. Unemployment rate and average hourly earnings held steady at 4.1% and 4% y/y, respectively. Meanwhile ISM manufacturing slipped (46.5 vs. 47.6 expected) but prices paid surged to 54.8 (vs. 50 expected). DXY was last at 103.74, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Tallying of the votes is expected to see USD trade choppy

“The Dolar Index (DXY) traded lower at first, but losses were pared and DXY traded higher into NY close. This morning, DXY opened and gapped lower. This is likely to have factored in the latest polling over the weekend – Harris closing the gap on Trump. Times/Siena poll showed Kamala Harris finding support in North Carolina, Nevada, Wisconsin and Georgia. Meanwhile Trump maintained an edge is Arizona while also improving in Pennsylvania – 19 electoral college votes.”

“In the betting market, Trump’s lead has narrowed significantly to 9.6ppts from high of 32.9ppts (29 Oct). Coincidentally (or not), the DXY also peaked around the same time and subsequently declined since then. Between now and election outcome, we still expect 2-way trades. Some of the build-up in USD gains seen in the last month may correct lower in the interim but given that Harris and Trump remain neck-and-neck even at this point, the pullback may also be shallow ahead of event day. Hence on decision day, FX price action may be asymmetric, depending on how much is being corrected between now and then.”

“Tallying of the votes is expected to see USD trade choppy. Daily momentum turned bearish while RSI fell from overbought conditions. We continue to see room for USD to drift lower. Support here at 103.60 )21 DMA), 102.90/103.10 levels (100 DMAs, 38.2% fibo fibo retracement of 2023 high to 2024 low) and 102.20 (50 DMA). Resistance at 103.80 levels (200 DMA, 50% fibo), 104.60 (61.8% fibo), and 105.20 levels. Data of interests this week include ISM services (Tue); FOMC (Fri 3am SGT).”

• The Pound Sterling jumps to near 1.3000 against the US Dollar as the latter declines ahead of the US presidential election.
• Kamala Harris appears to be giving a tough competition to Donald Trump, according to the latest polls.
• Investors expect the Fed and the BoE to cut interest rates by 25 bps on Thursday.

The Pound Sterling (GBP) gains sharply against the US Dollar (USD) in London trading hours on Monday but continues to struggle near the psychological resistance of 1.3000. The GBP/USD pair aims for a firm footing above the key support of 1.2900 as the US Dollar plunges ahead of the United States (US) presidential election on Tuesday. 

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, tumbles to near 103.60, the lowest level in almost two weeks.

The Greenback was knocked out after the Des Moines Register/Mediacom Iowa Poll showed that Democratic candidate Kamala Harris is up three points over former US President Donal Trump in a state where Trump won clearly in 2016 and 2020. Meanwhile, the majority of national polls show a knife-edge race between both candidates.

Trump’s victory is expected to weigh on risk-perceived currencies as he will likely favor protectionist policies to boost domestic business activity. Trump vowed to levy a 10% universal tariff on all economies, except for China, which is expected to face even higher duties.

Apart from the US election, investors will also focus on the Federal Reserve’s (Fed) policy decision, which will be announced on Thursday. The Fed is expected to cut interest rates again, but at a slower pace of 25 basis points (bps). In September, the Fed started the policy-easing cycle with a larger-than-usual 50 bps cut. Investors will pay close attention to the Fed’s guidance for the December policy meeting.

Daily digest market movers: Pound Sterling rises against its major peers

• The Pound Sterling performs strongly against its major peers at the start of the week, with investors also focusing on the Bank of England’s (BoE) monetary policy decision, which will be announced on Thursday.
• The BoE is expected to cut interest rates by 25 basis points (bps) to 4.75%. Out of the nine-member led Monetary Policy Committee (MPC), seven members are expected to vote in favor of a rate reduction, while two are expected to support leaving interest rates unchanged at 5%. BoE external MPC member Catherine Mann is likely to be one of those who would support keeping rates stable.
• Investors will pay close attention to BoE Governor Andrew Bailey’s press conference after the policy decision to get fresh guidance for the policy action in December. Market participants will also seek clues about how the BoE assessesAnnual Forecast Statement presented by the Labour government, particularly of how it could influence the interest rate path for the next year and the inflation outlook.
• UK Chancellor of the Exchequer announced 40 billion pounds worth of taxes, the highest since 1993, and a slew of investment projects to revive public spending. Reeves also announced that the Office for Business Responsibility (OBR) raised current-year inflation targets to 2.5% from the 2.2% projected in March.

Technical Analysis: Pound Sterling holds 200-day EMA

The Pound Sterling holds right above a fresh 11-week low of 1.2850 against the US Dollar, which also aligns with the 200-day Exponential Moving Average (EMA). While the pair seems to have found a cushion near the 200-day EMA around 1.2850, the near-term trend remains uncertain as it stays below the 50-day EMA around 1.3060. 

The pair remains at make or a break near the lower boundary of the Rising Channel chart formation on the daily time frame. 

The 14-day Relative Strength Index (RSI) rebounds above 40.00, signaling a buying interest at lower levels.

Looking down, the round-level support of 1.2800 will be a major cushion for Pound Sterling bulls. On the upside, the Cable will face resistance near the 50-day EMA around 1.3060.

Outlook is mixed; the Euro (EUR) is expected to trade sideways, likely staying within last Friday’s range of 1.0831/1.0905. In the longer run, upward momentum is beginning to build, but any advance in EUR is likely to face significant resistance at 1.0935, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Upward momentum is beginning to build

24-HOUR VIEW: “We indicated last Friday that ‘upward momentum is building, albeit tentatively.’ We also indicated that EUR ‘could rise to 1.0905, but the major resistance at 1.0935 is unlikely to come under threat.’ In NY trade, EUR rose to 1.0905, then pulled back sharply to close at 1.0834. In early Sydney trade today, EUR gapped up. The outlook is mixed, and today, we expect EUR to trade sideways, likely remaining within last Friday’s range of 1.0831/1.0905.”

1-3 WEEKS VIEW: “Last Friday (01 Nov, spot at 1.0885), we noted that ‘upward momentum is beginning to build.’ We held the view that EUR ‘could edge higher, but any advance is expected to face significant resistance at 1.0935.’ We highlighted that ‘To maintain the buildup in momentum, EUR must remain above the ‘strong support’ level, currently at 1.0815.’ EUR subsequently rose to 1.0905, then pulled back sharply to a low of 1.0831. It gapped higher today. While the buildup in momentum has slowed after the pullback, we will continue to hold the same view as long as 1.0815 is not breached.”

The latest US Employment Situation report by the Bureau of Labor Statistics (BLS) last Friday (1 November) turned in a much weaker jobs creation and an unchanged unemployment rate, as weather events (Hurricanes Helene and Milton) and strike activity in manufacturing peppered the US labor market outlook, UOB Group’s Senior Economist Alvin Liew notes.

FOMC rate cut expectations get solidified

“The US reported a much weaker jobs creation at just 12,000 (weakest since December 2020) amidst an unchanged unemployment rate of 4.1%, as weather events (Hurricanes Helene and Milton) and strike activity in manufacturing peppered the US labor market outlook. Wage growth accelerated above forecast to 0.4% m/m, 4.0% y/y in October, meaning wagepush inflation is still a concern.”

“Job creation in October was far from being broad-based compared to the previous months, as private sector hiring hit a snag in October recording a loss of -28,000, the first negative print since December 2020 (-236,000) while government hiring stayed healthy and kept the headline in the black. Job losses were recorded in manufacturing, leisure & hospitality, professional services, retail trade, warehousing & transportation, and utilities.”

“Post-October jobs report, market pricing for the Fed to cut by 25-bps in the November FOMC is close to certainty (98.9%), according to the CME FedWatch tool, and also in line with our and broad market projections.”

• Eurozone investors’ morale improves further in November.
• EUR/USD holds the recovery near 1.0900 after the encouraging Eurozone data.

The Eurozone Sentix Investor Confidence Index improved slightly to -12.8 in November from -13.8 in October, the latest survey showed on Monday.

The Current Situation gauge for the bloc, however, rose to -21.5 in the same period from -23.3 in October.

Sentix said, "A turnaround looks different.”

" Even if the crisis cannot shock investors in Germany because they are already in a minor key, no positive turnaround scenario can be derived from this data," it added.

Market reaction to the Eurozone Sentix data

EUR/USD clings to recovery gains near 1.0900 after the Eurozone data. As of writing, EUR/USD is trading 0.60% higher on the day.

Silver prices (XAG/USD) rose on Monday, according to FXStreet data. Silver trades at $32.78 per troy ounce, up 1.04% from the $32.44 it cost on Friday.

Silver prices have increased by 37.76% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 83.62 on Monday, down from 84.35 on Friday.

(An automation tool was used in creating this post.)

• Silver price appreciates as the US Dollar loses ground amid lower Treasury yields.
• The recent poll indicated that Kamala Harris and Donald Trump are locked in a close contest across seven battleground states.
• Silver demand may increase as China approves an additional stimulus package of more than 10 trillion yuan.

Silver price (XAG/USD) breaks its three-day losing session, trading around $32.70 during the European hours on Monday. The upside of the Silver prices could be attributed to the subdued US Dollar (USD) amid lower Treasury yields. A weaker dollar generally boosts demand for dollar-denominated commodities like silver, making them more attractive to buyers using other currencies.

The US Dollar Index (DXY), which measures the value of the US Dollar against its six major peers, trading around 103.80 with 2-year and 10-year yields on US Treasury bonds standing at 4.17% and 4.31%, respectively, at the time of writing.

Silver prices may hold ground as traders are also preparing for upcoming monetary policy decision from the US Federal Reserve (Fed) scheduled to be released later this week. The CME FedWatch Tool currently shows a 99.7% probability of a quarter-point rate reduction by the Fed in November.

Regarding US presidential election, traders adopt caution due to growing uncertainty surrounding the election results on Tuesday. The latest poll shows Vice President Kamala Harris with slight leads in Nevada, North Carolina, and Wisconsin, while former President Donald Trump holds a narrow edge in Arizona. The candidates are in close contests in Michigan, Georgia, and Pennsylvania. Conducted from October 24 to November 2, the final New York Times/Siena College poll indicated that all matchups in seven battleground states fall within a 3.5% margin of error.

The Standing Committee of the National People's Congress in China is meeting from November 4 to 8, where it is expected to approve additional debt and fiscal measures as part of a broader growth stimulus plan. Media reports suggest that the potential stimulus package could exceed 10 trillion yuan. As one of the world’s largest manufacturing hubs for electronics, solar panels, and automotive components, China may have increased demand for Silver.

We expect the RBA to keep the cash rate unchanged at 4.35% at the 5 November meeting. The benign Q3 CPI report removes any residual risk of further tightening in November. AUD weakness may reverse on FX positioning unwinds in the event of a Harris victory, Standard Chartered’s FX and Macro Strategist Nicholas Chia notes.

Comfortably on hold

“We expect the Reserve Bank of Australia (RBA) to maintain the cash rate at 4.35% on 5 November. The relatively benign Q3 CPI report strengthens our view for the RBA to remain on hold this year, with little impetus to change the policy rate in either direction. CPI inflation eased to 0.2% q/q in Q3 (Q2: +1%) amid an extension to the government’s energy rebates and lower oil prices (-7.4% q/q); on a y/y basis, inflation was at 2.8% (Q2: 3.8%). Trimmed mean CPI, the RBA’s preferred measure of underlying inflation, eased to 0.8% q/q in Q3 (Q2: +0.9%) and 3.5% y/y – an 11-quarter low (Q2: 4.0%).”

“The RBA is likely to judge that CPI disinflation remains on track, which removes any residual risk of a rate hike this year. However, the central bank is unlikely to ease policy soon, given that trimmed mean inflation (+3.5%) is still above its 2-3% target. The RBA may also be wary of any signs of an enduring rebound in inflation, such as the bounce in services inflation to 4.6% y/y in Q3 (Q2: 4.5%) partly due to base effects.”

“In terms of risks, the RBA may opt for a hawkish hold and bring back guidance that policy is “not sufficiently restrictive”, citing above-target underlying inflation for three straight years and persistent services inflation, which puts rate hikes back on the table. On the flip side, the RBA may drop the reference to ‘upside risks to inflation’ and ‘the Board is not ruling anything in or out’, suggesting that underlying inflation, while above-target, is trending in the right direction. It may also emphasise the recent weakness in household spending despite budgetary tax cuts. Both of these are not our baseline, but would be interpreted by markets as dovish, and therefore AUD-negative.”

• USD/CHF depreciates as the US Dollar loses ground amid lower Treasury yields.
• The recent poll indicated that Kamala Harris and Donald Trump are locked in a close contest across seven battleground states.
• The 10-year Swiss bond yield falls toward 0.38% due to rising expectations of more aggressive rate cuts by the SNB.

USD/CHF retraces its recent gains from the previous session, trading around 0.8650 during the European session on Monday. The US Dollar faces downward pressure as subdued Treasury yields follow Friday's weaker-than-expected US Nonfarm Payrolls report.

The US Dollar Index (DXY), which measures the value of the US Dollar against its six major peers, trading around 103.80 with 2-year and 10-year yields on US Treasury bonds standing at 4.17% and 4.31%, respectively, at the time of writing.

On the data front, the US Bureau of Labor Statistics (BLS) indicated that October’s Nonfarm Payrolls increased by only 12,000, following a revised September gain of 223,000 (down from 254,000), which fell well short of market expectations of 113,000. Meanwhile, the Unemployment Rate remained steady at 4.1% in October, matching the consensus forecast.

Traders are closely watching the upcoming US presidential election on Tuesday, as the final New York Times/Siena College poll showed Democratic candidate Kamala Harris and Republican nominee Donald Trump are locked in a close contest across seven battleground states on Sunday. The focus will shift to the US Federal Reserve (Fed) policy decision, with expectations of a modest 25 basis point rate cut later this week.

The yield on the 10-year Swiss government bond dropped toward 0.38%, its lowest level since early October, as expectations grew for more substantial rate cuts by the Swiss National Bank (SNB). This shift follows a continued slowdown in Switzerland's inflation, with the Consumer Price Index (CPI) falling 0.6% year-over-year in October, below the 0.8% forecast and marking the slowest rate of increase since July 2021.

Swiss inflation has not risen since April, and October's figure came in well below the SNB’s fourth-quarter inflation forecast of 1%. This raises the likelihood that the SNB may consider a larger rate cut in December to keep inflation within its target range of 0-2%, signaling concerns over potential economic softening.

• EUR/USD climbs to near 1.0900 as the US Dollar faces intense selling pressure ahead of the  US presidential election and the Fed’s policy announcement.
• The latest polls have shown Harris having a slight advantage over Trump.
• The Fed is expected to cut interest rates again on Thursday, but at a slower pace than the 50 bps trim it delivered in September.

EUR/USD jumps around the key resistance of 1.0900 in Monday’s European session. The major currency pair surges at the US Dollar’s (USD) expense amid increasing uncertainty ahead of the United States (US) presidential election on Tuesday and the Federal Reserve’s (Fed) monetary policy meeting on Thursday.

The US Dollar has started the week on a bearish note, with the US Dollar Index (DXY) declining below 103.70 as market participants expect a neck-to-neck competition between former President Donald Trump and current Vice President Kamala Harris. 

The sharp sell-off in the US Dollar came after the release of the Des Moines Register/Mediacom Iowa Poll, which showed Harris up three points on Trump in the state, Reuters reported. The poll’s result marks a turnaround from September in a state that Trump won clearly both in 2016 and 2020.

Traders see a Trump victory as positive for the US Dollar and Treasury yields as he has vowed to raise tariffs on imports and lower taxes, measures that would likely boost inflationary pressures and force the Fed to return to a restrictive policy stance. On the contrary, a Harris win is perceived to be a continuation of current government policies, which traders interpret as beneficial for risk-sensitive currencies.

Meanwhile, the Fed is set to meet on Thursday to decide about interest rates. The meeting, however,  is likely to be overshadowed by the US election outcome and also by the fact that traders have fully priced in a rate reduction of 25 basis points (bps), which would push key borrowing rates lower to 4.50%-4.75%, according to the CME Fedwatch tool. 

Still, investors will pay close attention to the guidance for monetary policy action for the last meeting of this year to be held in December. Markets also expect that the Fed will cut interest rates by 25 basis points (bps) next month.

On the economic data front, investors will focus on the US ISM Services Purchasing Managers’ Index (PMI) data for October, which will be published on Tuesday. The Services PMI is estimated to come in at 53.5, lower than 54.9 in September, suggesting that the index continues to expand but at a slower pace.

Daily digest market movers: EUR/USD gains on multiple tailwinds

• The strength in the EUR/USD pair is also backed by an upbeat Euro (EUR), which performs strongly since last week after a slew of Eurozone economic data diminished expectations of the European Central Bank (ECB) delivering large rate cuts in December.
• The Eurostat reported that the Eurozone economy expanded at a faster-than-expected pace in the third quarter of the year. Upbeat Eurozone Gross Domestic Product (GDP) data forced trades to pare bets supporting a larger-than-usual interest rate cut of 50 bps in the policy meeting next month.
• Meanwhile, inflationary pressures in the Eurozone accelerated to 2% in October, according to the flash estimate, also weighing on the ECB's big rate cut bets.
• In Monday’s session, investors will focus on the final HCOB Manufacturing PMI data for October from Germany and the overall Eurozone as well as the November Sentix Investors Confidence data. Apart from that, the speech from ECB policymaker and President of the Bundesbank Joachin Nagel will be on investors’ radar for fresh guidance on interest rates.

Technical Analysis: EUR/USD sees more upside above 1.0900

EUR/USD strives to extend its upside above the key resistance of 1.0900, which also aligns with the 200-day Exponential Moving Average (EMA). The pair rebounded sharply after gaining a firm footing near the upward-sloping trendline around 1.0750, which is plotted from the April 16 low at around 1.0600.

The 14-day Relative Strength Index (RSI) climbs to near 50.00, suggesting that the bearish momentum is fading.

Looking up, the shared currency pair could rise to near the September 11 low around 1.1000 after breaking above the 200-day EMA around 1.0900. On the downside, the October 23 low of 1.0760 will be the key support area for the Euro bulls.

• AUD/JPY remains steady as the Australian Dollar receives support from the hawkish mood surrounding the RBA.
• The Reserve Bank of Australia is widely anticipated to maintain the cash rate at 4.35% on Tuesday.
• The Japanese Yen may depreciate due to rising political and monetary policy uncertainties.

AUD/JPY extends its gains for the second consecutive day, trading around 100.40 during the early European hours on Monday. The Australian Dollar (AUD) receives support as the Reserve Bank of Australia (RBA) is expected to maintain the cash rate at 4.35% during Tuesday’s policy meeting, as underlying inflation, reflected in the trimmed mean, remains high. This anticipated hawkish stance from the RBA continues to support the Aussie Dollar, bolstering the AUD/JPY cross.

Additionally, the release of the Melbourne Institute’s Inflation Gauge data might have contributed support for the Australian Dollar. The TD-MI Inflation Gauge rose by 0.3% month-over-month in October, up from a 0.1% increase in the prior month, marking the highest reading since July and preceding the RBA's November policy meeting. Annually, the gauge climbed by 3.0%, compared to the previous 2.6% reading.

In China, the Standing Committee of the National People's Congress is meeting from November 4 to 8, during which it is expected to approve additional stimulus measures aimed at bolstering the slowing economy. Any additional measures taken could have a positive impact on Australian markets as both countries are close trade partners.

On Sunday, China’s Commerce Minister Wang Wentao met with Australia’s Trade Minister Don Farrell. China expressed hopes that Australia will continue enhancing its business environment and ensure fair and equitable treatment for Chinese companies.

Japanese markets are closed for the Sports Day holiday, halting physical trading of US Treasuries and slightly limiting JPY liquidity. The Japanese Yen may face weakness as political and monetary policy uncertainties rise, following last week’s parliamentary majority win by the Liberal Democratic Party (LDP) coalition, which has led to questions about the Bank of Japan’s (BOJ) future policy stance.

In a briefing last Thursday, BoJ Governor Kazuo Ueda noted that economic risks in the US appear to be easing, potentially opening the door for a future rate hike. Meanwhile, as expected, the Bank of Japan maintained its policy rate at 0.25%.

Here is what you need to know on Monday, November 4:

The US Dollar (USD) stays under heavy selling pressure to start the new week as investors gear up for the presidential election on Tuesday. Factory Orders for September will be the only data featured in the US economic docket on Monday. During the European trading hours, November Sentix Investors Confidence data from the Eurozone and revisions to October HCOB Manufacturing PMI for Germany and the Eurozone will be watched closely by market participants.

The USD Index ignored the disappointing labor market data on Friday and gained 0.4% on the day. The index, however, opened with a bearish gap and extended its slide to a fresh two-week low below 104.00. Meanwhile, US stock index futures trade marginally higher in the European morning on Monday.

Nonfarm Payrolls (NFP) in the US rose by 12,000 in October, the US Bureau of Labor Statistics (BLS) reported on Friday. This reading followed the 223,000 increase (revised from 254,000) recorded in September and missed the market expectation of 113,000 by a wide margin. "It is likely that payroll employment estimates in some industries were affected by the hurricanes; however, it is not possible to quantify the net effect on the over-the-month change in national employment, hours, or earnings estimates because the establishment survey is not designed to isolate effects from extreme weather events," the BLS explained in its press release.

EUR/USD snapped a four-day winning streak on Friday but ended the week in positive territory. The pair benefits from the broad-based selling pressure surrounding the USD early Monday and rises toward 1.0900.

GBP/USD gathers bullish momentum to start the new week and rises toward 1.3000, where it met resistance in the previous week. 

Following Thursday's sharp decline, USD/JPY reversed its direction on Friday and gained more than 0.6%. The pair stays on the back foot on Monday and fluctuates deep in the red at around 152.00.

Gold declined sharply after setting a new record-high and lost nearly 2% in the second half of the week. XAU/USD holds steady early Monday and trades near $2,740.

During the Asian trading hours, the data from Australia showed that the TD-MI Inflation Gauge, released by Melbourne Institute, rose to 3% on a yearly basis in October from 2.6% in September. The Reserve Bank of Australia (RBA) will announce monetary policy decisions early Tuesday and it's expected to leave the policy rate unchanged at 4.35%. AUD/USD keeps its footing following a bullish opening to the week and trades near 0.6600.

• NZD/USD jumps to the weekly highs near 0.6000 in Monday’s early European session. 
• The US presidential election uncertainty weighs on the USD and supports NZD/USD.  
• More dovish stance from the RBNZ might cap the Kiwi’s upside. 

The NZD/USD pair rises to near 0.6000 during the early European session on Monday. The weaker Greenback provides some support to the pair. Investors will closely monitor the looming US presidential election on Tuesday for fresh catalysts. This key event could trigger the volatility in the market.  

The decline in the US Dollar (USD) is likely due to a poll released over the weekend that reduced the probability of Republican Donald Trump winning the elections. Analysts predict that if Trump wins, the USD will rise. Chris Weston, an analyst at broker Pepperstone, said, "A Trump presidency with full control of Congress could be most impactful, as one would expect a solid sell-off in Treasuries resulting in a spike higher in the USD." 

Analysts believe potential uncertainty surrounding the election outcome will not impact the US Federal Reserve (Fed) decision-making process on Thursday. The Fed is expected to cut its benchmark rate by a quarter-point at the November meeting, following a half-point cut in September.

The upside of the New Zealand Dollar (NZD) might be limited due to the rising bets of a more dovish stance from the Reserve Bank of New Zealand (RBNZ). The markets have fully priced in a 50 basis point rate cut in November and currently estimate the reduction in the cash rate from 4.75% to 3.82% by the end of this year.

FX option expiries for Nov 4 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

EUR/USD: EUR amounts

• 1.0775 1.1b
• 1.0820 1.5b
• 1.0900 1.2b
• 1.0970 1.3b
• 1.1000 803m

GBP/USD: GBP amounts     

• 1.2850 560m
• 1.3000 800m

USD/JPY: USD amounts                     

• 152.00 601m
• 152.15 430m

USD/CHF: USD amounts     

• 0.8600 436m

AUD/USD: AUD amounts

• 0.6510 753m
• 0.6600 2.2b

USD/CAD: USD amounts       

• 1.3800 1.1b
• 1.3875 661m
• 1.4000 774m

NZD/USD: NZD amounts

• 0.6060 540m

EUR/GBP: EUR amounts        

• 0.8350 614m

• USD/CAD depreciates as the commodity-linked CAD gains ground due to the higher Oil prices.
• OPEC+ has extended its production cut of 2.2 million barrels per day through the end of December 2024.
• The recent polls indicate a tight race between Democratic candidate Kamala Harris and Republican nominee Donald Trump across seven states.

USD/CAD offers gains from the previous two days, trading around 1.3900 during the Asian hours on Monday. The commodity-linked Canadian Dollar (CAD) receives support from the higher Oil prices, which could be attributed to the delay in a planned output increase by the OPEC+ coalition, which includes the Organization of the Petroleum Exporting Countries and its allies, such as Russia.

West Texas Intermediate (WTI) Oil price appreciated around 2% on Monday, trading around $70.50 per barrel during Asian hours. On Sunday, the OPEC+ alliance agreed to extend its production cut of 2.2 million barrels per day (bpd) through the end of December 2024. citing weak demand and rising supply outside the group. Additionally, the member countries reaffirmed their commitment to "achieve full conformity" with production targets and to compensate for any overproduction by September 2025.

Traders are closely watching the upcoming US presidential election on Tuesday, as the final New York Times/Siena College poll shows Vice President Kamala Harris with slight leads in Nevada, North Carolina, and Wisconsin, while former President Donald Trump holds a narrow edge in Arizona. The candidates are in close contests in Michigan, Georgia, and Pennsylvania. Conducted from October 24 to November 2, the poll indicated that all matchups in seven battleground states fall within a 3.5% margin of error.

In addition to the election, traders are also focused on the upcoming US Federal Reserve (Fed) policy decision, with expectations of a modest 25 basis point rate cut this week. The CME FedWatch Tool currently shows a 99.6% probability of a quarter-point rate reduction by the Fed in November.

• The Japanese Yen rises as the US Dollar depreciates ahead of the US election results on Tuesday.
• JPY liquidity is expected to be limited as the Japanese markets are closed for Sports Day on Monday.
• The US Dollar depreciated due to the release of weaker Nonfarm Payrolls ahead of the Fed decision later this week.

The Japanese Yen (JPY) gains ground on Monday as the US Dollar (USD) declines, possibly driven by rising uncertainty surrounding Tuesday's US presidential election. However, JPY liquidity is somewhat limited due to the closure of Japanese markets for Sports Day, which prevents physical trading of US Treasuries.

The JPY may weaken in the future as political and monetary policy uncertainties grow following last week’s parliamentary majority win by the Liberal Democratic Party (LDP) coalition, which has created confusion regarding the Bank of Japan’s (BOJ) policy direction.

However, BoJ Governor Kazuo Ueda noted in the post-meeting briefing last Thursday that economic risks in the US seem to be decreasing, indicating that this could pave the way for a potential rate hike. Meanwhile, the Bank of Japan decided to maintain its policy rate at 0.25%, a move that was widely expected.

The weaker-than-expected Nonfarm Payrolls (NFP) data for October might have contributed to the decline of the US Dollar ahead of the Federal Reserve's (Fed) interest rate decision later this week. According to the CME FedWatch Tool, there is a 99.6% probability that the Fed will implement a quarter-point rate cut in November.

Daily Digest Market Movers: Japanese Yen rises as US Dollar depreciates ahead of US election

• The latest poll shows Vice President Kamala Harris with slight leads in Nevada, North Carolina, and Wisconsin, while former President Donald Trump holds a narrow edge in Arizona. The candidates are in close contests in Michigan, Georgia, and Pennsylvania. Conducted from October 24 to November 2, the final New York Times/Siena College poll indicated that all matchups in seven battleground states fall within a 3.5% margin of error.
• US Nonfarm Payrolls rose by 12,000 in October, following a revised September gain of 223,000 (down from 254,000), which fell well short of market expectations of 113,000. Meanwhile, the Unemployment Rate remained steady at 4.1% in October, matching the consensus forecast.
• Japan's Chief Cabinet Secretary Yoshimasa Hayashi stated on Friday that he anticipates the Bank of Japan will collaborate closely with the government to implement appropriate monetary policy aimed at achieving its price target in a sustainable and stable manner.
• The headline au Jibun Bank Japan Manufacturing PMI stood at 49.2 in October, indicating a decline from 49.7 in September. This composite single-figure indicator shows that Japanese manufacturing production continued to decline at the beginning of the fourth quarter of 2024, with both output and new order inflows decreasing at more pronounced rates.
• The US Personal Consumption Expenditures (PCE) Price Index showed that core inflation increased by 2.7% year-over-year in September. Additionally, Initial Jobless Claims dropped to a five-month low of 216,000 for the week ending October 25, signaling a robust labor market and lessening expectations for imminent rate cuts by the Federal Reserve (Fed).
• The Bank of Japan decided to keep its short-term interest rate target at 0.25% following the conclusion of its two-day monetary policy review on Thursday. This decision was in line with market expectations for maintaining stability.
• According to the BoJ Outlook Report for Q3, the central bank plans to continue raising policy rates as long as the economy and prices align with its forecasts, particularly given that real interest rates are currently very low. The Bank of Japan aims to conduct monetary policy with a focus on sustainably and stably achieving its 2% inflation target.
• US Gross Domestic Product (GDP) annualized expanded by 2.8% in Q3, below 3.0% in Q2 and forecasts of 3.0%. The ADP Employment Change report showed that 233,000 new workers were added in October, marking the largest increase since July 2023. This followed an upward revision to 159,000 in September and significantly exceeded forecasts of 115,000.

Technical Analysis: USD/JPY trades below 152.00, lower boundary of the ascending channel

The USD/JPY pair trades around 151.80 on Monday. Daily chart analysis suggests a potential weakening of the bullish bias, as the pair has broken below its ascending channel. However, the 14-day Relative Strength Index (RSI) remains above 50, indicating that bullish momentum is still present.

In terms of resistance, the USD/JPY pair faces a hurdle at the lower boundary of the ascending channel, located at the 152.90 level. If the pair manages to re-enter this channel, it could aim for the recent high at 153.88 level before the upper channel boundary near 158.90.

On the downside, the 14-day Exponential Moving Average (EMA) at the 151.60 level serves as immediate support for the USD/JPY pair, with additional support found around the psychological level of 150.00.

USD/JPY: Daily Chart

Gold prices rose in India on Monday, according to data compiled by FXStreet.

The price for Gold stood at 7,408.59 Indian Rupees (INR) per gram, up compared with the INR 7,396.72 it cost on Friday.

The price for Gold increased to INR 86,412.29 per tola from INR 86,273.88 per tola on friday.

FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.

(An automation tool was used in creating this post.)

• The Indian Rupee gathers strength in Monday's Asian session. 
• The weaker USD amid the uncertainty surrounding the US election outcome supports the INR. 
• The HSBC India Manufacturing PMI is due later on Monday. 

The Indian Rupee (INR) edges higher on Monday on the decline in the US Dollar (USD) amid the likely unwinding of long positions in the lead-up to the US presidential election. However, the sustained foreign outflows from domestic stocks and rising crude oil prices might cap the INR’s upside. 

The US presidential election and the Federal Reserve's (Fed) interest rate decision will be in the spotlight this week and might trigger volatility in the market. The Federal Reserve is widely anticipated to cut rates by 25 basis points (bps) at its November meeting on Thursday. On the Indian docket, the HSBC Manufacturing Purchasing Managers' Index (PMI) will be released on Monday. 

Daily Digest Market Movers: Indian Rupee rebounds ahead of looming US presidential election  

• According to a Reuters poll, the Indian rupee will trade in a tight range around current levels against the dollar over the coming year as the Reserve Bank of India (RBI) routinely dips into its FX reserves to manage the currency's stability.
• "The (FX) intervention has been an ongoing affair and it's not just this year, it's been continuing post-COVID so we would expect two-sided interventions to continue," noted Vivek Kumar, an economist at QuantEco Research.
• The Nonfarm Payrolls (NFP) in the US rose by 12K in October, following the 223K increase (revised from 254K) seen in September, the US Bureau of Labor Statistics (BLS) showed Friday. The figure was weaker than the market expectations of 113K by a wide margin. 
• The Unemployment Rate held steady at 4.1% in October, in line with the consensus.
• "It is widely considered that a Trump win will be positive for the USD, though many feel this outcome has been discounted," noted Chris Weston, an analyst at broker Pepperstone. 

Technical Analysis: USD/INR’s positive view remains in play in the longer term

The Indian Rupee trades weaker on the day. However, the bullish outlook of the USD/INR pair remains intact, with the price holding above the key 100-day Exponential Moving Average (EMA). The upward momentum is reinforced by the 14-day Relative Strength Index (RSI), which stands above the midline near 57.70.

The first upside barrier for USD/INR emerges at the upper boundary of the ascending trend channel of 84.24. Extended gains break above this level could draw in enough buying demand to 84.50, en route to the 85.00 psychological level. 

On the downside, a decisive close below the lower limit of the trend channel near 84.05 could pave the way to 83.78, the 100-day EMA. 

• WTI price rises as the OPEC+ group has delayed the planned output increase.
• OPEC+ has extended its production cut of 2.2 million barrels per day through the end of December 2024.
• Traders observe the upcoming US presidential election and the Fed’s policy decision this week.

West Texas Intermediate (WTI) Oil price appreciated more than 1% on Monday, trading around $70.20 per barrel during Asian hours. The recent increase in crude Oil prices can be attributed to the delay in a planned output increase by the OPEC+ coalition, which includes the Organization of the Petroleum Exporting Countries and its allies, such as Russia.

On Sunday, the OPEC+ alliance agreed to extend its production cut of 2.2 million barrels per day (bpd) through the end of December 2024. citing weak demand and rising supply outside the group. Additionally, the member countries reaffirmed their commitment to "achieve full conformity" with production targets and to compensate for any overproduction by September 2025.

Traders are closely watching the upcoming US presidential election on Tuesday, as polls indicate a tight race between Democratic candidate Kamala Harris and Republican nominee Donald Trump across seven battleground states, according to the final New York Times/Siena College poll cited by Reuters.

The survey shows Vice President Harris with slight leads in Nevada, North Carolina, and Wisconsin, while former President Trump has a narrow advantage in Arizona. The candidates are in a dead heat in Michigan, Georgia, and Pennsylvania. Conducted from October 24 to November 2, the poll suggests that all matchups fall within a 3.5% margin of error.

In addition to the election, traders are also focused on the upcoming US Federal Reserve (Fed) policy decision, with expectations of a modest 25 basis point rate cut this week. The CME FedWatch Tool currently shows a 99.6% probability of a quarter-point rate reduction by the Fed in November.

In China, the Standing Committee of the National People's Congress is meeting from November 4 to 8, during which it is expected to approve additional stimulus measures aimed at bolstering the slowing economy. Any additional measures taken could have a positive impact on Oil prices, given that China is the world's largest Oil importer.

• The Australian Dollar appreciated as the TD-MI Inflation Gauge rose by 0.3% MoM in October, up from previous 0.1% increase.
• The Reserve Bank of Australia is widely expected to maintain the cash rate at 4.35% on Tuesday.
• The US Dollar may receive support from safe-haven flow amid uncertainty surrounding the US presidential election results on November 5.

The Australian Dollar (AUD) strengthens after the release of the Melbourne Institute’s Inflation Gauge data on Monday. The Reserve Bank of Australia (RBA) is expected to maintain the cash rate at 4.35% during Tuesday’s policy meeting, as underlying inflation, reflected in the trimmed mean, remains high. This anticipated hawkish stance from the RBA continues to support the Aussie Dollar, bolstering the AUD/USD pair.

The TD-MI Inflation Gauge rose by 0.3% month-over-month in October, up from a 0.1% increase in the prior month, marking the highest reading since July and preceding the RBA's November policy meeting. Annually, the gauge climbed by 3.0%, compared to the previous 2.6% reading.

The US Dollar (USD) weakens following Friday's release of weaker-than-expected US October Nonfarm Payrolls (NFP) data. However, uncertainty surrounding the outcome of the US presidential election on November 5 could prompt safe-haven flows, which may support the Greenback.

Traders are also focusing on the upcoming US Federal Reserve (Fed) policy decision, with expectations of a modest 25 basis point rate cut this week. The CME FedWatch Tool currently indicates a 99.6% probability of a quarter-point rate cut by the Fed in November.

Daily Digest Market Movers: Australian Dollar rises following release of key domestic data

• ANZ Australia Job Advertisements increased by 0.3% month-over-month in October, a notable slowdown from the upwardly revised 2.3% gain in September. Despite the weaker growth, this marks the second consecutive month of increases.
• On Sunday, China’s Commerce Minister Wang Wentao met with Australia’s Trade Minister Don Farrell. China expressed hopes that Australia will continue enhancing its business environment and ensure fair and equitable treatment for Chinese companies.
• The final New York Times/Siena College poll, reported by Reuters, shows Vice President Kamala Harris with slight leads in Nevada, North Carolina, and Wisconsin, while former President Donald Trump holds a narrow edge in Arizona. The candidates are in close contests in Michigan, Georgia, and Pennsylvania. Conducted from October 24 to November 2, the poll indicated that all matchups in seven battleground states fall within a 3.5% margin of error.
• US Bureau of Labor Statistics (BLS) indicated that October’s Nonfarm Payrolls increased by only 12,000, following a revised September gain of 223,000 (down from 254,000), which fell well short of market expectations of 113,000. Meanwhile, the Unemployment Rate remained steady at 4.1% in October, matching the consensus forecast.
• Australia's Producer Price Index rose by 0.9% quarter-on-quarter in Q3, following a 1.0% increase in the prior period and surpassing market forecasts of a 0.7% rise. This marks the 17th consecutive period of producer inflation. On an annual basis, the PPI growth slowed to 3.9% in Q3, down from the previous quarter’s 4.8% increase.
• China’s Caixin Manufacturing Purchasing Managers Index (PMI) increased to 50.3 in October, up from 49.3 in September, surpassing market expectations of 49.7. As China is a key trade partner for Australia, shifts in the Chinese economy could significantly influence Australian markets.
• The US Personal Consumption Expenditures (PCE) Price Index indicated that core inflation rose by 2.7% year-over-year in September. Additionally, Initial Jobless Claims fell to a five-month low of 216,000 for the week ending October 25, signaling a resilient labor market and reducing expectations for imminent rate cuts by the Federal Reserve (Fed).
• The seasonally adjusted Australian Retail Sales rose by 0.1% month-over-month in September, falling short of the expected 0.3% and significantly down from the 0.7% growth seen in the previous month. On a quarterly basis, Retail Sales increased by 0.5% in Q3, rebounding from a 0.3% decline in the prior quarter.

Technical Analysis: Australian Dollar tests 0.6600, nine-day EMA

AUD/USD trades near 0.6600 on Monday. The daily chart signals a possible softening of the bearish bias as the pair tests the nine-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) remains below the 50 level; a rise above 50 would reflect a shift in momentum from bearish to bullish.

On the resistance side, AUD/USD faces the nine-day EMA at 0.6602, with the next resistance at the 14-day EMA at 0.6625. A break above these levels could strengthen the pair, potentially targeting the psychological level of 0.6700.

In terms of support, AUD/USD may find immediate support at the three-month low of 0.6536. A break below this level could push the pair toward the key psychological level of 0.6500.

AUD/USD: Daily Chart

• Gold price drifts higher in Monday’s Asian session. 
• Safe-haven demand amid US presidential election uncertainties, persistent Middle Eastern tensions, might lift the Gold price. 
• Traders brace for the US election outcome on Tuesday ahead of the Fed rate decision.

The Gold price (XAU/USD) trades in positive territory on Monday. The US presidential election risks and the ongoing Middle East geopolitical tensions are likely to underpin the yellow metal, a traditional safe-haven asset, in the near term. Nonetheless, the renewed Greenback demand and higher US bond yields might cap the upside for Gold price as higher yields make non-yielding assets like bullion less attractive in comparison.

Investors will closely watch the looming US presidential election on Tuesday. The attention will shift to the US Federal Reserve (Fed) rate decision on Thursday. The uncertainty over the US election outcome is one reason markets assume the Fed will deliver a rate cut of the usual 25 basis points (bps) on Thursday, rather than repeat its outsized half-point easing.

Daily Digest Market Movers: Gold price remains strong ahead of US presidential election

• “ETFs should see further inflows due to the expected interest rate cuts, high fiscal deficits and the highly valued stock markets. However, investment demand in the fourth quarter could be heavily influenced by the outcome of the US elections. The central bank's Gold purchases are likely to be strong again this year, but not at the levels seen in the previous two years. Jewelry demand is also expected to be lower than in the previous year, albeit somewhat higher than previously expected by the WGC,” noted Commerzbank analysts. 
• PredictIt has placed a 51% chance of a Harris win on Tuesday, marking the vice president's first lead over Trump (who leads Harris at a 49% chance) on the site since October 9.
• The US NFP increased by 12K in October, the smallest gain since December 2020. This figure followed the 223K rise (revised from 254K seen in September) and below the market consensus of 113K, by a wide margin.
• The Unemployment Rate was unchanged at 4.1% in October, matching the expectations.
• Financial markets have fully priced in a 25 basis points (bps) rate cut by the US Federal Reserve (Fed) at its November meeting on Thursday.

Technical Analysis: Gold price keeps the bullish vibe in the longer term

The Gold price edges higher on the day. The positive picture of the precious metal prevails as the price holds above the key 100-day Exponential Moving Average (EMA) on the daily chart. Furthermore, the 14-day Relative Strength Index (RSI) stands above the 50-midline near 60.20, suggesting the support level is likely to hold rather than break. 

More green candlesticks above the all-time high and psychological mark in the $2,790-$2,800 zone could bump XAU/USD to $2,850. 

On the other hand, consistent trades below $2,715, the low of October 24 might drag the yellow metal to $2,624, the low of September 30, followed by the $2,600 round mark. 

• GBP/USD drifts higher to around 1.2970 in Monday’s early Asian session, up 0.40% on the day. 
• The USD remains under selling pressure amid weaker US NFP data, uncertainty around the US presidential election.  
• The BoE is expected to trim the rate by a quarter-point to 4.75%.

The GBP/USD pair jumps to near 1.2970 on the softer Greenback during the Asian trading hours on Monday. The US Dollar (USD) remains under some selling pressure after the weaker US Nonfarm Payrolls (NFP) data for October, which provides some support to the major pair. 

After delivering a 50 basis points (bps) rate reduction in September to start the easing cycle, the US Federal Reserve (Fed) is anticipated to cut its policy rate by 25 bps in the November meeting. Markets are pricing this outcome with a roughly 97% probability. The Greenback edges lower as traders brace for the US presidential election and Fed interest rate decision this week. 

Analysts expect Donald Trump's policies on immigration, tax cuts, and tariffs would put upward pressure on inflation, treasury bond yields, and the USD, while Kamala Harris was seen as the continuity candidate. "It is widely considered that a Trump win will be positive for the USD, though many feel this outcome has been discounted," noted Chris Weston, an analyst at broker Pepperstone. 

On the other hand, the Bank of England (BoE) is likely to cut interest rates on Thursday, despite forecasts that Labour’s budget could lead to higher inflation in the UK the next year. Money markets appeared confident that the BoE would announce the second 25 bps reduction of the year, lowering the policy rate to 4.75%.

The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Monday at 7.1203, as compared to the previous day's fix of 7.1135 and 7.1208 Reuters estimates.

• EUR/USD appreciates as the US Dollar receives downward pressure following the release of weaker Nonfarm Payrolls on Friday.
• The US Dollar may receive support from safe-haven flows amid uncertainty surrounding the US presidential election.
• The Euro found support as recent economic data in the Eurozone has prompted traders to reassess the ECB’s policy outlook.

EUR/USD retraces its recent losses from the previous session, trading around 1.0880 during Asian hours on Monday. The pair's upside can be attributed to a softer US Dollar (USD) after the release of weaker-than-expected US October Nonfarm Payrolls (NFP) data. However, uncertainty surrounding the US presidential election could drive safe-haven flows, potentially limiting the upside of the EUR/USD pair.

On Friday, data from the US Bureau of Labor Statistics (BLS) indicated that October’s NFP increased by only 12,000, following a revised September gain of 223,000 (down from 254,000), which fell well short of market expectations of 113,000. Meanwhile, the Unemployment Rate remained steady at 4.1% in October, matching the consensus forecast.

According to the final New York Times/Siena College poll, cited by Reuters, Democratic candidate Kamala Harris and Republican nominee Donald Trump are locked in a close contest across seven battleground states just two days before the US presidential election.

The poll shows Vice President Kamala Harris with slight leads in Nevada, North Carolina, and Wisconsin, while former President Donald Trump holds a narrow advantage in Arizona. The two are in tight races in Michigan, Georgia, and Pennsylvania. The poll, conducted from October 24 to November 2, indicates that all matchups in these states fall within the 3.5% margin of error.

The Euro found support from stronger-than-expected economic growth in the third quarter and higher-than-anticipated inflation in the Eurozone, prompting traders to reassess expectations for a larger-than-usual rate cut by the European Central Bank (ECB) in December. Markets have now fully priced in a 25 basis point cut in the ECB’s deposit rate for December, which would be the fourth reduction this year following cuts in October, September, and June.

Preliminary data showed that the Eurozone Harmonized Index of Consumer Prices rose to 2.0% year-over-year in October, up from 1.7% previously and beating forecasts of 1.9%. Meanwhile, the annual core inflation rate held steady at 2.7%. Additionally, Eurozone Gross Domestic Product (GDP) grew by 0.4% quarter-over-quarter in Q3, doubling the growth seen in Q2 and surpassing expectations of 0.2%.

The US presidential election prediction markets continue to favor Vice President Kamala Harris, whose odds have surpassed former President Donald Trump on one betting site for the first time in almost a month, as polls indicate a practically tied race between the two candidates.

PredictIt has placed a 51% possibility of a Harris win on Tuesday, marking the vice president's first lead over Trump (who leads Harris at 49% chances) on the site since October 9.

Market reaction

At the time of press, the DXY was down 0.42% on the day at 103.87. 

A larger group called OPEC+, consisting of OPEC members plus other oil-producing countries, have agreed to extend their oil production cut to 2.2 million barrels per day (bpd) until the end of December 2024. 

The countries also reiterated their commitment to “achieve full conformity” with their production targets and to compensate for any overproduction by September 2025.  

Market reaction

At the time of press, WTI was up 1.81% on the day at $70.35.