CFD Markets News and Forecasts — 05-11-2024

• EUR/USD climbed on Tuesday, netting a half-percent gain and touching a three-week high.
• Fiber pushed back above the 200-day EMA, but plenty of technical issues remain.
• Looming Fed rate cut to give investors plenty to chew on following US presidential election.

EUR/USD benefited from a broad-market decline in the US Dollar as global markets brace for early polling outcomes from the US presidential election that kicked off on Tuesday. Fiber jumped two-thirds of one percent to claw back above the 1.0900 handle as investors hope for a market-positive outcome as the US election cycle gets set to pick the next US President for the next four years.

Outside of an appearance from European Central Bank (ECB) President Christine Lagarde, EU-based market data remains relatively limited this week. Pan-EU Retail Sales figures are due on Thursday, with this week’s EU leaders’ summit set to wrap up on Friday and a follow-up appearance from ECB President Lagarde slated for Saturday when the market will be closed.

US election odds have both candidates neck-and-neck in a dead-heat race for the Presidency, with former President Donald Trump and current Vice President Kamala Harris polling within 5% of each other, depending on which poll results you reference. Equity investors, tech sector addicts specifically, appear to broadly believe former President Trump to be the preferred stock-friendly candidate, an odd choice considering the Republican candidate has strongly voiced support of a return to the Smoot-Hawley tariff era of US history. Trump has regularly suggested stiff tariffs across the board on all imported goods into the US, an incredibly inflationary economic policy proposal.

Another Federal Reserve (Fed) rate call looms ahead this week. Fed Chair Jerome Powell is widely expected to deliver another quarter-point cut to interest rates on Thursday, bringing the Fed Funds Rate down 25 bps to 4.75%. The Fed Funds Rate peaked at 5.5% in July of 2023, and investors have been clamoring for a return to a low interest rate environment that has become familiar territory since US interest rates clattered to an all-time low near 0% in early 2009.

The University of Michigan’s (UoM) Consumer Sentiment Index is waiting in the wings and slated for release on Friday. Investors expect November’s UoM sentiment indicator to climb to a six-month high of 71.0 from the previous month’s 70.5.

EUR/USD price forecast

The EUR/USD pair is currently staging a rebound above the 1.0900 level after a period of decline, with recent bullish momentum challenging the 50-day EMA, situated at 1.0937. This level aligns closely with the pair’s current trading range, indicating that the area between 1.0900 and 1.0937 could act as a near-term resistance zone. The 200-day EMA, positioned at 1.0902, provided initial support, allowing the pair to bounce back from the lows seen earlier in October, signaling a potential shift in sentiment toward the upside.

The MACD indicator on the daily chart shows signs of recovery as well, with the MACD line inching closer to the signal line and the histogram flipping into positive territory. This transition suggests a potential build-up in bullish momentum, although the crossover has yet to materialize decisively. A clear MACD crossover, if achieved, could support further gains in the short term. For now, traders should be cautious as the pair remains at a crucial juncture where rejection from the 50-day EMA could lead to another downside test.

In the immediate term, sustained buying pressure could propel EUR/USD toward the 1.1000 psychological resistance, with further gains likely if buyers manage to clear the 50-day EMA. On the downside, any loss of the 1.0900 level could see the pair revisiting 1.0850 and, potentially, the October lows near 1.0700. Overall, while the pair’s technicals indicate a cautiously bullish outlook, EUR/USD remains vulnerable to reversal if it fails to break above the moving averages decisively.

EUR/USD daily chart

The New Zealand Unemployment Rate in the third quarter (Q3) climbed to 4.8% from 4.6% in the second quarter, according to data published by Statistics New Zealand on Wednesday. The market consensus was a 5.0% print in the reported period.

Additionally, the Employment Change decreased by 0.5% in the third quarter from a 0.4% increase in the previous reading. This figure came in weaker than the expectation of a 0.4% decrease.

Market reaction to New Zealand employment report

At the time of writing, NZD/USD is trading 0.17% higher on the day at 0.6005.  

• GBP/USD rallied 0.65% on Tuesday as markets brace for US presidential election results.
• Central bank double-header due this week with 25 bps rate trims expected from both the US and the UK.
• BoE, Fed both expected to drop reference rates down to 4.75%.

GBP/USD found the gas pedal on Tuesday, ramping up another two-thirds of a percent and clawing back above the 1.3000 handle as markets brace for what is likely to be a messy outcome from the US presidential election. Widely-anticipated rate cuts are also due from both the Bank of England (BoE) and Federal Reserve (Fed) this week, giving investors plenty to chew on in what is set to be one of the busiest weeks of the rest of the trading year.

US election odds have both candidates neck-and-neck in a dead-heat race for the Presidency, with former President Donald Trump and current Vice President Kamala Harris polling within 5% of each other, depending on which poll results you reference. Equity investors, tech sector addicts specifically, appear to broadly believe former President Trump to be the preferred stock-friendly candidate, an odd choice considering the Republican candidate has strongly voiced support of a return to the Smoot-Hawley tariff era of US history. Trump has regularly suggested stiff tariffs across the board on all imported goods into the US, an incredibly inflationary economic policy proposal.

The BoE’s latest rate call, slated for Thursday, is expected to deliver another quarter-point cut to investors. The BoE’s Monetary Policy Committee is expected to vote seven-to-two to reduce the BoE’s main reference rate to 4.75% from the current 5.0%.

Another Fed rate call looms ahead this week. Fed Chair Jerome Powell is widely expected to deliver another quarter-point cut to interest rates on Thursday, bringing the Fed Funds Rate down 25 bps to 4.75%. The Fed Funds Rate peaked at 5.5% in July of 2023, and investors have been clamoring for a return to a low interest rate environment that has become familiar territory since US interest rates clattered to an all-time low near 0% in early 2009.

The University of Michigan’s (UoM) Consumer Sentiment Index is waiting in the wings and slated for release on Friday. Investors expect November’s UoM sentiment indicator to climb to a six-month high of 71.0 from the previous month’s 70.5.

GBP/USD price forecast

The GBP/USD pair is currently trading just above the 1.3000 psychological level, showcasing a promising bullish rebound after a recent dip towards the 1.2850 support area. This recovery is marked by a decisive bounce off the 200-day EMA (1.2858), which acted as a strong support level, indicating buyers are stepping in to defend this area. The 50-day EMA, positioned slightly above at 1.3045, is now in focus as the pair edges higher, presenting a potential resistance zone. If GBP/USD can sustain its current momentum and clear the 50-day EMA, it could pave the way for further gains in the near term.

The MACD indicator at the bottom of the chart reflects a bullish crossover with the MACD line crossing above the signal line. This crossover is typically seen as a signal of upward momentum, suggesting that the bullish sentiment may continue in the short term. Moreover, the histogram has shifted to the positive side, indicating that bullish momentum is gaining traction. However, traders should watch for any significant resistance near the 1.3050 area, as this level aligns with the 50-day EMA and could act as a short-term barrier.

Looking ahead, a sustained move above the 50-day EMA may open the door for GBP/USD to test the next resistance around 1.3150. Conversely, if the pair fails to hold above 1.3000, it may retest the 200-day EMA support around 1.2850. A break below this level could lead to further downside pressure, potentially targeting the 1.2700 level. Overall, GBP/USD’s technical outlook leans cautiously bullish in the near term, but it remains susceptible to volatility and possible reversals, especially around key moving averages.

GBP/USD daily chart

American voters have little time left to cast their votes as polls will start closing at 19:00 EST or 00:00 GMT. United States (US) citizens have to decide whether Vice President Kamala Harris or former President Donald Trump will become the 47th President of the United States.

As the time approaches, election polls increasingly show Donald Trump has an advantage over his rival. Kalshi shows an overwhelming 57% to 43% Trump's advantage over Harris, while Polymarket puts the figures at 60.7% and 39.5%, respectively.

In the meantime, Trump stays on top in some swing states such as Arizona and North Carolina, while Harris seems to have taken a small lead in Wisconsin and Michigan. Four swing states – Arizona, Nevada, Pennsylvania, and Wisconsin – have absentee ballot procedures that could delay the calling of a winner.  Swing states are likely to define who will take office and exit polls from such states could shake financial boards.

"Early vote returns in US battleground states may not be a good indicator of whether Democratic candidate Kamala Harris or Republican rival Donald Trump will win, experts say, thanks to vote counting rules and quirks in several key states," explains Reuters.

Follow our live coverage of the market reaction to the US presidential election as counting results start hitting the wires.

• Silver's uptrend persists; a break above $33.00 may target October 31 high of $33.89.
• Failure to surpass $33.00 could see support tested at $32.25, with further downside toward $31.32.
• Market volatility expected as US election results unfold, influencing precious metals' performance.

Silver fluctuated around $32.50 during Tuesday’s session amid an expected volatile session, with investors awaiting US election results later. Greenback continues to lose ground against precious metals, with XAG/USD gaining over 0.60%.

XAG/USD Price Forecast: Technical outlook

Silver’s uptrend remains intact, but the precious metal remains below $33.00. This could keep sellers hopeful of driving price action lower, but momentum still favors buyers.

If XAG/USD clears the $33.00 mark, the next stop would be the high of the October 31 bearish candle at $33.89. Up next is the $34.00 figure, which, if cleared, bulls can re-test the year-to-date (YTD) peak at $34.86.

For a bearish resumption, sellers need to clear the $32.25 November 5 swing low. A breach of the latter will expose the October 17 doji’s daily low of $31.32, ahead of testing the 50-day Simple Moving Average (SMA) at $31.23.

XAG/USD Price Chart – Daily

• NZD/JPY pair remains directionless, showing a lack of clear upward or downward momentum.
• Sellers maintain some control as the pair remains below its 20-day Simple Moving Average.

The NZD/JPY pair has been trading sideways over the past sessions, consolidating within a range and rose to 91.10 on Tuesday. Bears continue to win small battles and are slowly pushing the cross below the 20-day Simple Moving Average (SMA). 

The Moving Average Convergence Divergence (MACD) histogram presents rising red bars, indicating increasing selling pressure. However, the Relative Strength Index (RSI) is rising from the midpoint, suggesting a potential recovery in buying momentum. Overall, the technical outlook for NZD/JPY remains mixed, with no clear trend emerging but with some selling signals emerging.

Traders can closely monitor key support and resistance levels to gauge market sentiment. Support levels currently stand at 91.00, 90.70 and 90.30, while resistance levels reside at 91.30, 91.50, and 92.00.

The prevailing range-bound movement aligns with the mixed technical outlook, indicating indecision in the market. Until a clear break above or below these support and resistance levels occurs, the sideways movement is likely to continue.

NZD/JPY daily chart

• Technical indicators suggest a gradual recovery of buying pressure, but resistance at the 20-day SMA may hinder further gains.
• Indeed, the buyers got rejected at the mentioned average which made the pair trim daily gains.

The NZD/USD pair has resumed its choppy movement, with a an upward bias, after a brief dip below the 0.6000 support. The pair is currently trading around 0.5994, facing resistance at the 20-period Simple Moving Average (SMA), which has capped further gains in recent sessions.

Technical indicators are recovering, suggesting a potential shift in momentum. The Relative Strength Index (RSI) is gradually recovering from oversold territory, indicating a recovery in buying pressure. However, the Moving Average Convergence Divergence (MACD) histogram remains negative, suggesting that selling pressure is still dominant.

If the RSI continues to rise and the MACD turns positive, it could indicate a shift towards a bullish trend. Conversely, if the RSI falls back into oversold territory and the MACD continues to decline, it could signal a continuation of the downtrend.

The pair is facing resistance at 0.6000, 0.6030, and 0.6040, while support is at 0.5960, 0.5930, and 0.5900. 

NZD/USD daily chart

• Gold gains as investors seek refuge amid election-related uncertainty and global tension.
• US Treasury yields steady; rising real yields slightly cap Gold’s advance.
• Analysts warn prolonged election result could further boost Gold prices in the coming days.

Gold prices increased during the New York session as Americans kept going to the polls amidst one of the closest of the US presidential elections this century. Risk appetite has improved, yet the golden metal post gains of over 0.22% due to uncertainty linked to election jitters and the Middle East.

The XAU/USD traded at $2,741 after bouncing off daily lows of $2,724. US Treasury bond yields had pared some of their gains, particularly the 10-year benchmark note, which remained unchanged at 4.289%. US real yields, which inversely correlate against Bullion, are up five basis points to 2.00%, capping the advance of the non-yielding metal.

Market players continued to cling to safe-haven assets outside of the Greenback amidst political uncertainty on the US election results. Gold, the Yen, and the Swiss Franc remain on the front foot, with most polls showing Democratic candidate Kamala Harris and Republican Donald Trump too close to call.

Commerzbank analysts wrote in a note, “Should the election result be uncertain for days or even weeks, Gold would benefit from the resulting uncertainty.”

A Reuters poll on Monday showed concerns that the US could face a similar election crisis like the one that followed Trump’s 2020 election defeat.

By Thursday, the Federal Reserve (Fed) is expected to lower borrowing costs by 25 basis points to the 4.50%-4.75% range.

The US economic schedule revealed that the Balance of Trade deficit widened in September. Following that data, US business activity showed mixed signs. S&P Global reported a dip in October’s service activity, while the Institute for Supply Management’s (ISM) Services PMI showed improvement for the same period.

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

• The US Bureau of Economic Analysis reported that the trade deficit widened in September to $-84.4 billion, up from a revised $-70.8 billion and slightly exceeding economists' forecast of $-84.1 billion.
• The US S&P Global Services PMI for October came in at 55.0, below the forecast of 55.3 and down from September's 55.2.
• The ISM Services PMI for October rose to 56, up from 54.9 in September and surpassing expectations for a deceleration to 53.8.
• The Federal Open Market Committee (FOMC) is expected to implement a 25 bps rate cut on November 7.
• Data from the Chicago Board of Trade, based on the December fed funds rate futures contract, indicates that investors estimate 49 basis points (bps) of Fed easing by the end of the year.

XAU/USD Technical Outlook: Gold price hovers below $2,750

Gold prices are consolidating, with the XAU and USD fluctuating at around $2,724 to $2,749 as traders await the first results of the US election.

Momentum favors buyers, as the uptrend remains intact. The Relative Strength Index (RSI) is bullish and, despite stabilizing, is almost flat.

Gold buyers must reclaim the key psychological level of $2,750 to maintain a bullish momentum. Clearing this level would set the stage for a potential move to the all-time high of $2,790. However, an additional downside is likely if XAU/USD closes below $2,750 on the daily chart.

The initial support is at the October 23 low of $2,708, with further support at $2,700. Beyond that, the next levels are the former resistance turned support at $2,685 — the September 26 swing high — and the 50-day Simple Moving Average (SMA) at $2,628.

• AUD/USD climbs as RBA Governor Michelle Bullock emphasizes the need to maintain a restrictive rate stance.
• US presidential election remains the main driver for AUD/USD ahead of Trump-Harris debate.
• Trump’s victory expected to be unfavorable for AUD due to his promise to raise tariffs on China.

In Tuesday's session, the AUD/USD rose 0.77% to 0.6638 as the Reserve Bank of Australia (RBA) signaled a hawkish stance on interest rates. The central bank's Governor, Michelle Bullock, stressed the need to maintain a restrictive monetary policy amid persistent inflationary pressures.

The Australian Dollar is also being influenced by the upcoming US presidential election, with a potential victory by Donald Trump viewed as unfavorable for AUD due to his promise to raise tariffs on China. In addition, the pair is expected to react to the release of US inflation data and the Federal Reserve's (Fed) policy meeting this week, as market participants assess their potential impact on the USD.

Daily digest market movers: Australian Dollar rising as RBA favors hawkish guidance

• AUD/USD strengthened as the RBA maintained a hawkish stance, leaving interest rates unchanged at 4.35%.
• RBA Governor Michelle Bullock emphasized the need for a restrictive interest rate stance due to persistent upside risks to inflation.The RBA stated that policy will need to remain restrictive until inflation moves sustainably toward the target range.
• The outlook for AUD/USD is uncertain amid the upcoming US presidential election, with Trump's victory potentially negative for the Australian Dollar due to his proposed tariffs on China.
• Investors will also monitor the Fed's policy meeting this week, with a 25 basis point interest rate cut widely anticipated.

AUD/USD technical outlook: Bulls recover and aim for the 100-day SMA

The AUD/USD pair has been recovering after a recent decline. The Relative Strength Index (RSI) is suggesting that buying pressure is recovering, as its value is at 48, rising sharply in the negative area. The Moving Average Convergence Divergence (MACD) is suggesting that selling pressure is flat, but as it's staying in the red, a change in trend could be seen in the following sessions. The overall outlook suggests a neutral to slight positive sentiment, with the pair likely to trade within a range before breaking out.The pair is striving to hold the psychological level of 0.6600 and reclaim the 200-day Simple Moving Average (SMA) at 0.6630. This move indicates a potential shift in market sentiment, with buyers regaining control after a period of consolidation.

• The Canadian Dollar added another 0.4% to extend the week’s rebound.
• Canada sees a tepid showing on the economic calendar this week.
• Broader markets remain focused on US election results, impending Fed rate cut.

The Canadian Dollar (CAD) gained further ground on Tuesday, climbing over four-tenths of one percent against the Greenback as global markets hunker down and wait for the outcome of the US presidential election this week. 

Canada sees a limited spread of mid-tier data releases on the economic calendar this week, leaving the Loonie at the mercy of global market flows into and out of the safe haven US Dollar (USD). With another Federal Reserve (Fed) rate cut looming over the horizon, market volatility is set to whip and froth in tune with the US release schedule this week.

Daily digest market movers

• Canadian Internation Merchandise Trade shrank again in September, contracting by 1.26 billion CAD compared to August’s -1.47 billion contraction.
• The US ISM Services Purchasing Managers Index (PMI) stepped higher in October, rising to 56.0 from the previous d54.9 and handily beating the forecast decline to 53.8.
• The Bank of Canada’s (BoC) latest Summary of Deliberations revealed little new of note as the Canadian central bank continues to grapple with a lopsided economic decline taking hold of the broader Canadian economy.
• The seasonally-adjusted Canadian Ivey PMI is expected to climb on Thursday, forecast to rise to 54.2 in October compared to September’s 53.1.
• After the US presidential election finishes roiling markets early this week, investors will be pivoting on their heels to face Thursday’s impending Federal Reserve (Fed) rate call, which is expected to deliver another quarter-point rate cut.

Canadian Dollar price forecast

The Canadian Dollar (CAD) has extended into a second day of recovery against the Greenback, climbing another 0.45% and dragging the USD/CAD pair back below 1.3850. The pair reached a near-term high just north of 1.3950 late last week after the US Dollar capped off a 4% rally against the Loonie. 

USD/CAD continues to grind out chart paper in a long-term sideways trend since reaching familiar footholds in mid-2022. In the medium-term, the pair is likely headed for a fresh leg into the low end below 1.3600 if current technical flows maintain their stranglehold on USD/CAD patterns.

USD/CAD daily chart

The Greenback remained largely on the defensive on Tuesday, retreating to three-week lows amidst heightened expectation ahead of the outcome of the US election and the upcoming Fed meeting.

Here is what you need to know on Wednesday, November 6:

The US Dollar Index (DXY) extended its bearish move, revisiting the proximity of 103.40 despite a decent rebound in US yields across the curve. The usual weekly Mortgage Applications are due, followed by the EIA’s weekly report on US crude oil inventories.

Extra gains lifted EUR/USD to fresh four-week tops near 1.0940, a region also coincident with the interim 100-day SMA. The final HCOB Services PMI in Germany and the euro area are due along with Germany’s Factory Orders and the EMU’s Producer Prices. In addition, the ECB’s Buch and De Guindos are due to speak.

GBP/USD reclaimed the 1.3000 barrier and beyond, up for the fourth session in a row and reaching new multi-day highs. The S&P Construction PMI will be published.

USD/JPY came under further downside pressure and receded to the 151.40-151.30 band, or two-week lows. Next on tap comes the BoJ Minutes and the final Jibun Bank Services PMI.

AUD/USD advanced past the 0.6600 hurdle, surpassing the key 200-day SMA and hitting new two-week peaks on the back of the weaker US Dollar. The RBA’s Chart Pack will be unveiled.

WTI prices advanced to three-week highs north of the $72.00 mark per barrel before giving away all those gains and remain slightly negative for the day, as traders kept assessing the recent decision by the OPEC+ to postpone its planned oil output increase in December.

Gold prices added to Monday’s slight gains and retested the $2,750 region per ounce troy on the back of steady caution ahead of the US election. Silver prices followed suit and rose to two-day highs near the $33.00 mark per ounce.

• Mexican Peso depreciates against the US Dollar, as USD/MXN remains above 20.00 figure.
• Mexican Supreme Court debates judiciary reform amid rising domestic political tensions.
• US election in close race adds to Peso's depreciation as investors seek safe-haven assets.

The Mexican Peso depreciated to a new record low against the Greenback on Tuesday as the US presidential election got underway. The Mexican Supreme Court began discussing Judge Juan Luis González Alcántara Carranca's proposal to modify the controversial judiciary reform presented by the ruling party Morena. At the same time, US business activity slowed, though it remains robust. The USD/MXN trades at 20.28, up by 0.95%.

Mexico’s economic docket is absent. Domestically speaking, investors focus on the Supreme Court decision amid an ongoing judicial crisis in the country.

Supreme Court Judge Juan Luis González Alcántara Carranca's proposal suggests that, “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,” via The New York Times.

President Claudia Sheinbaum refrained from discussing the court’s decision. During the same press conference, she responded to Republican candidate and former President Donald Trump about immigration, saying, “There will be a good relationship.” Sheinbaum added, “There has been a 75% decrease in migrants arriving at the northern border.”

Across the border, the US presidential election continues in a narrow race between Democratic Vice President Kamala Harris and Republican former president Trump. Trump’s campaign recognized that the election would likely not be called this afternoon, according to CNN, citing sources.

The US economic docket revealed that the Balance of Trade deficit widened, while business activity cooled slightly. S&P Global revealed that October’s service activity dipped, while the Institute for Supply Management’s (ISM) Services PMI improved for the same period.

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 Chair 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 on the backfoot on US election fears

• The USD/MXN remains adrift from political turmoil in Mexico after the approval of the controversial judiciary reform.
• Analysts see Mexico’s inflation moderating in October, according to Reuters.
• They project the Consumer Price Index (CPI) in October at 4.73% above the prior month’s 4.58% YoY. However, core CPI is expected to decrease for the 21 straight months to 3.85% from 3.91%.
• Former US President Donald Trump's harsh rhetoric weighs on the Peso. If Trump wins, a strong US Dollar could weigh on the Mexican currency, which could depreciate sharply due to threats to impose 25% tariffs on all products.
• The US Bureau of Economic Analysis revealed the US trade deficit widened in September to $-84.4 billion from a revised $-70.8 billion. Economists estimated the less widened deficit of $-84.1 billion.
• The US S&P Global Services PMI was 55.0 in October, below the forecast of 55.3 and September’s 55.2.
• The ISM Services PMI for the same period expanded to 56, from 54.9 in September, exceeding estimates of a deceleration to 53.8.
• 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 49 bps of Fed easing by the end of the year.

USD/MXN technical outlook: Mexican Peso trims some losses as USD/MXN drops below 20.20

The USD/MXN reached a new yearly peak of 20.35, yet the pair has retreated below 20.20 as recent polls showed Kamala Harris up in Nevada. Despite this, the uptrend remains intact, and a break above 20.35 could open the door to challenge the 20.50 figure ahead of September. 28, 2022, high at 20.57, and the August 2, 2022, peak at 20.82.

Conversely, if USD/MXN drops further, the first support would be the 20.00 figure. Once surpassed, the next stop 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.

• US Dollar retreats as United States election uncertainty offsets upbeat service sector data.
• ISM Services PMI surges, signalling accelerating growth in the sector despite ongoing political concerns.
• Trump's election odds affect US Dollar amid expectations of inflationary policies.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, retreats as uncertainty surrounding the upcoming US presidential election dampens gains from upbeat service sector data. Despite a surge in the ISM Services PMI indicating robust growth, concerns over the election outcome weigh on the Dollar's strength. 

The US Dollar Index has recently declined due to increased probability of Kamala Harris winning the US presidential election and a disappointing October Nonfarm Payrolls (NFP) report released last week. The weak job growth data, despite rising wage inflation, has raised expectations of a less hawkish Federal Reserve (Fed) stance. In the meantime, markets are pricing in a 25-basis-point rate (bps) cut by the Fed this week, which could further weaken the US Dollar.

Daily digest market movers: US Dollar down as US presidential election commences

• US Dollar faces selling pressure as attention shifts toward the US presidential election.
• ISM Services PMI for October exceeded expectations, indicating accelerating growth in the US service sector.
• The ISM Services PMI rose to 56 from 54.9 in September. This reading came in above the market expectation of 53.8.
• Prices Paid Index, a gauge of inflation, eased slightly, while the Employment Index improved.
• Concerns over political uncertainty rose among businesses, as per the ISM survey.
• Markets anticipate a 25 bps rate cut from the Fed next week and another in December.
• Investors speculate that a Trump victory could support the US Dollar due to his inflationary policies.
• There are no Fed speakers this week due to the media blackout ahead of the November 6-7 FOMC meeting.

DXY technical outlook:  Bearish momentum grows, support at 103.50

The DXY index is consolidating, possibly indicating a retest of the 200-day SMA support at 103.50. The Relative Strength Index (RSI) is sloping downwards, escaping overbought territory. The Moving Average Convergence Divergence (MACD) is indicating lower green bars, further hinting at a potential retracement. 

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

United States citizens are deciding who will rule the destiny of the world’s largest economy today. Either Vice President Kamala Harris or former President Donald Trump will become the 47^th President of the United States.

Over the weekend, one of the major betting platforms, PredictIt, showed that Harris became the slight favorite to win the US presidential election, surpassing Trump for the first time since early October. This lead, however, remained short-lived as Trump moved to the top again on the platform, albeit with a small margin.

Although US presidential election betting odds should not be taken as a representative view of US voters, they might still trigger a reaction in financial markets. Unlike PredictIt, RealCelarPolling's average for betting odds currently has Trump with at a comfortable lead against Harris, 57.7 vs 40.7.

According to Reuters, betting site PredictIT showed Harris at 54 to Trump on 53, compared to 42 to 61 just a week ago.

Nevertheless, polls show the race remains tight. Neither Harris nor Trump has a clear lead, with polls showing a modest 1 to 2-point lead favoring one or other candidate.  The election will likely be defined by the so-called seven swing states, that is, states without a clear winner at sight, as opposed to most US states, which clearly lean towards either Republicans or Democrats

“Polls will start closing at 19:00 EST or 00:00 GMT, and the excitement on exit polls will likely move markets, although the final result could take a couple of days. The focus will be on the key seven swing states, with Georgia, North Carolina and Pennsylvania among the first to report,” notes Valeria Bednarik, FXStreet.com Chief Analyst.

Follow our live coverage of the market reaction to the US presidential election as counting results start hitting the wires.

Top Battlegrounds: Trump vs. Harris

According to www.realclearpolling.com

• The Dow Jones pushed back into the high end of near-term consolidation on Tuesday.
• Equity markets are bracing for the results of the US election showdown that kicks off this week.
• Indexes have been rangebound heading into the election window.

The Dow Jones Industrial Average (DJIA) gained ground on Tuesday, climbing around 300 points to add three-quarters of one percent to its top-line. The major equity index is bumping into the ceiling of a near-term consolidation range as investors brace for the outcome of the US election as US voters head to the polls.

Another Federal Reserve (Fed) rate call looms ahead this week. Fed Chair Jerome Powell is widely expected to deliver another quarter-point cut to interest rates on Thursday, bringing the Fed Funds Rate down 25 bps to 4.75%. The Fed Funds Rate peaked at 5.5% in July of 2023, and investors have been clamoring for a return to a low interest rate environment that has become familiar territory since US interest rates clattered to an all-time low near 0% in early 2009.

US election odds have both candidates neck-and-neck in a dead-heat race for the Presidency, with former President Donald Trump and current Vice President Kamala Harris polling within 5% of each other, depending on which poll results you reference. Equity investors, tech sector addicts specifically, appear to broadly believe former President Trump to be the preferred stock-friendly candidate, an odd choice considering the Republican candidate has strongly voiced support of a return to the Smoot-Hawley tariff era of US history. Trump has regularly suggested stiff tariffs across the board on all imported goods into the US, an incredibly inflationary economic policy proposal.

The University of Michigan’s (UoM) Consumer Sentiment Index is waiting in the wings and slated for release on Friday. Investors expect November’s UoM sentiment indicator to climb to a six-month high of 71.0 from the previous month’s 70.5.

Dow Jones news

Most of the Dow Jones equity board is firmly in the green on Tuesday, with less than ten of the index’s listed securities down by half of a percent or more. Losses are being led by Boeing (BA), which backslid nine-tenths of a percent and falling below $154 per share. Boeing briefly rallied early Tuesday after announcing that the aerospace company finally negotiated an end to their workers’ strike, but markets remain concerned about the airplane manufacturers profitability looking forward and sent the ticker back into the low end.

Intel (INTC) rose over 4% on Tuesday, climbing into $23.50 per share despite an announcement that the Dow Jones Industrial Average would be dropping the chipmaker in favor of long-running AI rally darling Nvidia. Nvidia will be included in the Dow Jones equity roll beginning on Friday, November 8.

Dow Jones price forecast

The Dow Jones has seen some near-term chop as the major index grinds out chart paper around the 42,000 major handle. Price action has been pinned to the 50-day Exponential Moving Average (EMA) since dipping into its current range at the end of October. 

Despite recent consolidation, the Dow Jones remains pinned deep into bull country. The index has outpaced its 200-day EMA for over a year straight and has closed higher for all but two of the last 11 straight calendar months. 
 

Dow Jones daily chart

• The EUR/GBP cross faced rejection at the crucial 100-day SMA last week, signaling a potential shift in trend.
• The cross might sideways within a range defined by the 100-day SMA and the 20-day SMA providing support.

The EUR/GBP cross has been exhibiting a sideways trend in recent trading sessions, consolidating within a narrow range. This consolidation phase is likely to continue until a decisive breakout occurs in either direction, providing further guidance on the cross's future trajectory. On Tuesday de cross mildly declined towards the 0.8380 area.

The Relative Strength Index (RSI) is at 55 indicating that buying pressure is declining as is in the positive area and has a mildly declining slope. The Moving Average Convergence Divergence (MACD) is green and decreasing, also suggesting that bullish momentum is waning. 

Overall, the technical indicators suggest that the EUR/GBP cross is in a neutral phase, with both bullish and bearish forces vying for control. A breakout from the current range between the 20 and 100-day Simple Moving Average (SMA) will provide further clarity on the cross's future direction. With some signs of bearish forces emerging, the 20-day SMA at 0.8350 might be set to recieve a visit in the near term.

EUR/GBP daily chart

The results of the US elections will clearly determine the course of fiscal policy in the US. A Trump victory is widely expected to extend the US’s large budget deficit by more than a Harris one, though the extent will also clearly depend on the make-up of Congress, Rabobank’s Senior FX Strategist Jane Foley notes.

Trump means Fed to stop cutting cycle by February

“In Rabobank’s view a Trump win could result in the Fed’s rate cutting cycle being over by January. This suggests a stronger outlook for the USD next year which would likely be bolstered further by a red wave. Beyond 2025, the inflationary implications of trade tariffs will be complicated by the detrimental impact that they are likely to have on growth in the US (and beyond).”

“A Harris victory in the US election may also add to the US budget deficit, though a divided Congress could limit fiscal policy changes and leave the Fed’s rate cutting cycle on course. Consequently, a Harris presidency is likely to trigger a selloff in the USD near-term, though the outlook for 2026 is less clear.”

“We will be re-evaluating our USD forecasts following the results of the US election. Either way, we continue to favour buying AUD/NZD on dips, although a less dovish Bailey on November 7 could trigger some upside for GBP/AUD. The Eurozone is attempting to reclaim fiscal prudence which should reduce inflationary hurdles for the ECB. Assuming risk appetite holds, we also see upside potential for AUD/EUR towards 0.62.”  

• The ISM Services PMI improved to 56 in October.
• The US Dollar Index stays in the red below 104.00.

The economic activity in the US service sector expanded at an accelerating pace in October, with the ISM Services PMI rising to 56 from 54.9 in September. This reading came in above the market expectation of 53.8.

Other details of the report showed that the Prices Paid Index, the inflation component, edged lower to 58.1 from 59.4, while the Employment Index improved to 53 from 48.1.

Assessing the survey's findings, "concerns over political uncertainty were again more prevalent than the previous month," said Steve Miller, Chair of the Institute for Supply Management (ISM) Services Business Survey Committee. "Impacts from hurricanes and ports labor turbulence were mentioned frequently, although several panelists mentioned that the longshoremen’s strike had less of an impact than feared due to its short duration."

Market reaction

The US Dollar Index showed no immediate reaction and was last seen losing 0.2% on the day at 103.70.

• USD/CAD falls as the US Dollar weakens following a late-stage comeback by Kamala Harris in Republican safe-State Iowa.  
• A Harris win would be negative for USD whilst a Trump victory would strengthen the Dollar, say analysts. 
• The Canadian Dollar labors under a black cloud of fundamentals including a weak economy and falling Oil prices. 

USD/CAD trades down by about three-tenths of a percent in the 1.3860s on the day of the US presidential election. This comes as the US Dollar (USD) weakens after a late surge in the polls for Democrat nominee Kamala Harris puts the election on a knife edge. Last week former President Donald Trump was ahead, albeit by a small margin. 

The prior expectation that Trump will win contributed to pushing the USD/CAD to a new high for the year of 1.3959 on November 1, however, Harris’ late showing in the usually safe Republican State of Iowa – according the reputedly accurate Ann Selzer poll – has led to a sell-off in the USD and the Loonie pair on Monday and Tuesday. 

USD/CAD Daily Chart

Markets are forecasting that a Harris win will be negative for the US Dollar whilst a victory for Donald Trump will have the oposite impact. Trump’s threats of putting tariffs on foreign imports and his inflationary tax cuts are the two main reasons – under Harris there would be no risk of tariffs.

The prediction model of the highly-rated election website 538.com is showing a 50% probability of Vice President Harris winning whilst former President Donald Trump has a 49% chance of victory. The model gives a 1% chance of there being no overall winner. 

The election uncertainty combined with the proximity of the Federal Reserve (Fed) November 6-7 meeting is putting further pressure on USD/CAD. Some analysts are speculating that the Fed may opt to make a double-dose 50 basis points (bps) (0.50%) interest rate cut simply in order to calm markets, if it is unclear who has won the election. 

“If markets spin out of control, the FOMC may opt for a 50 bps cut as a circuit breaker,” says Philip Marey, Senior US Strategist, at Rabobank.  

His views are not backed by market-based gauges of Fed policy, however, with swap rates showing zero chance of a 50 bps cut but a roughly 95% chance of a 25 bps cut instead  – and 5% probability of no cut – according to the CME FedWatch tool. 

Nor does the huge miss suffered in the October US Nonfarm Payrolls (NFP) report, which showed only 12,000 new employees in the US in the month, compared to 223,000 in September and well below expectations of 113,000, increase the odds of a 50 bps cut, according to some analysts. The weak employment gains were put down to the temporary effect of Hurricane’s Helene and Milton. 

“October’s distorted payrolls print probably won’t change the outlook for the Fed, which we expect to cut by 25 bps next week,” said Joe Maher, Assistant Economist, Capital Economics in a note on Friday. 

Trading under a cloud

The Canadian Dollar, meanwhile, continues to operate under a cloud of negative fundamentals which may limit downside for USD/CAD. 

The Bank of Canada (BoC) has been one of the most aggressive major central banks when it comes to cutting interest rates this year, having cut the bank’s cash rate from 5.00% in May 2024 to 3.75% currently. This includes a double-dose 50 bps (0.50%) cut in October. Lower interest rates are usually negative for a currency as they reduce foreign capital inflows. 

Markets are further betting the BoC might cut by another 50 bps at its meeting in December due to overall weak fundamentals, particularly if employment data continues to show a decline. 

“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,” says Nathan Janzen, Assistant Chief Economist at RBC in a recent note. 

A further source of weakness for CAD is the steep sell-off in Crude Oil, which is only just rebounding from the mid-$60s per barrel (WTI Crude) and entering the $70 region. Oil is Canada’s largest export so Oil prices can impact gross demand for its currency. 

Green shoots through the ice

Not all is doom and gloom, however, and there are signs of green shoots in the Canadian economy which the more optimistic argue might lead the BoC to relax its stance to future easing. 

Most recently, 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. 

In addition, Canadian GDP looks to have lifted from its nadir at the end of 2023 when Canada almost fell into a recession. In the second quarter of 2024 the Canadian economy grew by 0.5% compared to the previous quarter, up from 0.4% in Q1. 

That said, not all analysts are optimistic about the outlook for the economy. National Bank of Canada foresees even more weakness for the Canadian Dollar as GDP slows due to a marked decline in Canadian population growth. 

“According to the latest targets, population growth is now projected to decline for two consecutive years – a first in modern history. If this unprecedented shift is implemented swiftly, it will likely dampen GDP growth in the coming quarters,” says National Bank’s Strategist Stéfane Marion. 

The reduced GDP growth compared to the US moreover is likely to lead to a divergence in central bank policy between the two nations. Whereas the Fed might take a more cautious approach to cutting interest rates, the BoC could be forced to continue slashing them. Such a scenario would drive USD/CAD higher, with Marion revising up her target for pair from 1.41 in November 2024 to 1.45. 

Swap spreads between US and Canadian government bonds – often seen as a proxy for the exchange rate – are already at a low not seen since the Asian financial crisis in the 1990s, says the strategist. 

“While the U.S. economy is operating in a state of excess demand, Canada is grappling with excess capacity,” Marion notes. “As today’s Hot Chart shows, this unusual development supports a significant divergence in monetary policy, now reflected in the widest spreads on 2-year Treasury yields between Canada and the U.S. since the 1997-98 Asian crisis—a key driver of the exchange rate.” 

• GBP/USD clears 100-day SMA; aims for October’s 30 high of 1.3047.
• Buyers may push toward 1.3100, with 50-day SMA resistance at 1.3118.
• Failure to hold 1.3000 could see the pair retreat to 1.2908 support level.

The Pound Sterling advanced against the Greenback during the North American session, with buyers reclaiming the 1.3000 figure and clearing the 100-day Simple Moving Average (SMA) resistance at 1.2982. At the time of writing, the GBP/USD trades at 1.3011, up by 0.43%.

GBP/USD Price Forecast: Technical outlook

After briefly consolidating on Monday, the GBP/USD cleared the 1.3000 figure, though it remains slightly tilted to the downside. Buyers would need to regain October’s 30 swing high of 1.3047 to take control and push the pair toward 1.3100. Once done and those levels are removed, the next resistance would be the 50-day SMA at 1.3118.

On the other hand, sellers would need to drag the GBP/USD below 1.3000 and the 100-day SMA for a bearish resumption. In that outcome, the next support would be the October 24 and 25 low of 1.2908, followed by the October 31 pivot low of 1.2843 ahead of the 200-day SMA at 1.2810.

Oscillators suggest that bulls are gathering steam, with the Relative Strength Index (RSI) aiming up. However, it remains shy of cracking its 50 neutral line. Therefore, caution is warranted.

GBP/USD Price Chart – Daily

USD/JPY consolidated; last at 151.81 levels. US election makes noise, Governor Ueda’s press conference had some influence too, OCBC’ FX analysts Frances Cheung and Christopher Wong notes.

Ueda paves the way for BoJ hike in December

“Bullish momentum on daily chart faded while RSI was flat. 2-way trades likely. Support at 151.60 (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).”

“Ueda spoke about how 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). Wage growth remains intact, alongside broadening services inflation and this is supportive of BoJ normalizing rates while JPY should continue to regain strength.”

• USD/JPY remains flat-lined near 152.00 as traders are uncertain about the US presidential election outcome.
• The Fed is expected to cut interest rates by 25 bps on Thursday.
• Investors await BoJ minutes to get fresh cues about when the central bank will hike interest rates again.

The USD/JPY pair trades sideways near 152.00 in the North American session on Tuesday. The asset remains sideways as investors have been sidelined with the United States (US) presidential elections underway. Ahead of the completion of the voting process, traders expect fierce competition between former President Donald Trump and Democratic contender Kamala Harris.

The pair will be guided by market expectations for the US election outcome, which will be influenced by exit polls. According to analysts at TD Securities, “A Red Wave (favoring Republicans) would kick-start a sizeable USD rally. It would rekindle memories of US Exceptionalism, anchored by tariffs, tax cuts, deregulation, and negative impacts on the outlook for EZ and China."

At the time of writing, the US Dollar slumps, with the US Dollar Index (DXY) declining to 103.70. This week, investors will also focus on the Federal Reserve’s (Fed) monetary policy decision, which will be announced on Thursday.

According to the CME FedWatch tool, traders have priced an interest rate reduction by 25 basis points (bps) to 4.50%-4.75%. This will be the second straight interest rate cut, however, the size of rate cut will be smaller as risks of an economic downturn have diminished lately. In September, the Fed reduced its interest rates by 50 bps.

On the Tokyo front, investors await Bank of Japan (BoJ) monetary policy minutes for the October 31 meeting in which the central bank kept interest rates unchanged at 0.25% for the second time in a row. BoJ Governor Kazu Ueda didn’t provide any cues about more interest rate hikes. “We will scrutinize data available at the time at each policy meeting, and update our view on the economy and outlook in deciding policy,” Ueda said.

American voters have started casting their ballots to decide whether Vice President Kamala Harris or former President Donald Trump will become the 47th President of the United States.

Latest election polls point to a tight race. The TIPP poll has Donald Trump and Kamala Harris tied at 48, the Ipsos poll has Harris leading by two points, 50 vs 48, and the Atlas Intel poll has Trump leading by one point, 50 vs 49, as per RealClearPolling.

While Trump stays on top in some swing states, such as Arizona and North Carolina, Harris seems to have taken a small lead in Wisconsin and Michigan. Four swing states – Arizona, Nevada, Pennsylvania and Wisconsin – have absentee ballot procedures and that could delay the calling of a winner.

Source: RealClearPollig.com

"Early vote returns in US battleground states may not be a good indicator of whether Democratic candidate Kamala Harris or Republican rival Donald Trump will win, experts say, thanks to vote counting rules and quirks in several key states," explains Reuters.

Polls will close at 00:00 GMT and ensuing exit polls should provide some information on which candidate is likely to capture swing states. 

In the meantime, US presidential election betting odds point to a Donald Trump victory. RealClearPolling's average for betting odds currently has Trump at 59.2 and Harris at 39.3.

Follow our live coverage of the market reaction to the US presidential election as counting results start hitting the wires.

The Euro (EUR) partially retraced earlier gains amidst US election volatility. Pair was last seen at 1.0898 levels, OCBC’ FX analysts Frances Cheung and Christopher Wong notes.

2-way risks amid the US elections

“Momentum is mild bullish while the rise in RSI moderated. 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).”

“Risks are 2-way from here dependent on outcome of US election results (which should start coming in on Wednesday).”

The US Dollar’s (USD) pullback overnight was unsurprisingly shallow, given that US elections remain a key event risk and Trump-Harris are still polling quite tightly. DXY was last at 103.73, OCBC’ FX analysts Frances Cheung and Christopher Wong notes.

Daily momentum turns bearish

“CBS News’ most recent polling also shows the race as a toss-up in the 7 battleground states, including Pennsylvania, Michigan, Wisconsin, Nevada, Georgia, Arizona and North Carolina. That said, in the final PBS poll, Harris managed a 4-point lead over Trump, and this is a lead outside the poll’s 3.5-point margin of error. Between now and election outcome, we still expect election volatility to drive 2-way trades. On 6th Nov starting 7am (SGT), US election results should start to come in.”

“But the range of time zones across US means that some states on the west coast like Alaska and Hawaii will still be polling. Some states will also count votes more quickly than others but if the race is tight, then counting should continue and the winner may only be announced a few days later. In 2020, the result was only called for Biden 4 days later after Pennsylvania was confirmed while in 2016, Clinton conceded the morning after election day. One other point to note is that mail-in votes take longer to count as they need to be verified (vs. in-person voting) and this year is a record >80million of early votes being cast.”

“Different states have their own triggers for recount. For example, in Pennsylvania, recount will automatically kick-in if margin of victory is less than or equal to half a percentage point. Daily momentum turned bearish while RSI fell from overbought conditions. Support here at 103.70/80 levels (21, 200 DMAs, 50% fibo), 102.90/103.10 levels (100 DMAs, 38.2% fibo retracement of 2023 high to 2024 low) and 102.30 (50 DMA). Resistance at 104.60 (61.8% fibo) and 105.20 levels.”

• NZD/USD moves higher to near 0.6000 amid upbeat market sentiment.
• Traders see a tight competition between Kamala Harris and Donald Trump for the US presidential elections.
• Investors expect the RBNZ to reduce its interest rates again by 50 bps on November 27.

The NZD/USD pair climbs to near the psychological resistance of 0.6000 in North American trading hours on Tuesday. The Kiwi asset strengthens as the market sentiment turns cheerful with the United States (US) presidential elections taking center stage.

Traders remain uncertain over the likely outcome, with the latest polls showing a neck-to-neck competition between former President Donald Trump and their Democratic rival Kamala Harris.

The S&P 500 opens on a positive note, exhibiting decent demand for risk-sensitive assets. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, falls slightly to near 103.70.

Trump’s victory will be unfavorable for an economy like New Zealand, which is one of the leading trading partners of China. Trump vowed to levy a 60% import tariff on China if he wins, which will escalate risks to economic growth.

Though risk-on market mood has assisted a recovery in the kiwi dollar, its overall appeal remains weak as investors expect the Reserve Bank of New Zealand (RBNZ) to cut its interest rates again by 50 basis points (bps) in its last monetary policy meeting of this year on November 27.

The NZ economy is in dire need of economic stimulus to diminish fears of a further slowdown in the economy and revive labor demand. For fresh cues about current employment status, investors await Q3 Employment data, which will be published on Wednesday. The labor market report is expected to show that the Unemployment Rate rose to 5% from 4.6% in the previous quarter.

• EUR/CAD could go higher after breaking out of a large multi-month consolidation. 
• Alternatively, the pair might have formed a Double Top pattern and be about to fall.

EUR/CAD has two possible polar-opposite scenarios in which price could play out:

1) The pair is going higher – it has broken out from a consolidation pattern formed since August and is about to rally as it fulfills the price target for the pattern. 

2) The breakout above the upper trendline of the pattern is “false” and the pair has formed a small Double Top bearish reversal pattern (DT) instead. This will likely see prices fall if price breaks below the pattern’s lows.

EUR/CAD 4-hour Chart 

A break above the 1.5172 (November 1 high) would probably confirm scenario 1) and lead to a continuation higher, to an initial target at 1.5228, the August 5 high, followed by 1.5312, the 61.8% Fibonacci price projection of the height of the pattern. 

A break below 1.5110 (November 1 low), on the other hand, would probably confirm the DT and lead to a move down to 1.5051 which is equal to the height of the pattern extrapolated lower. 

Volume was lower on the right hand shoulder of the DT compared to the left (red dotted line on chart) which helps confirm the pattern as authentic and adds bearish color. 

• EUR/AUD is probably reversing its trend and starting a new downtrend. 
• After it peaked on October 31 it formed a bearish candlestick reversal pattern which is currently playing out.  

EUR/AUD has started to fall after forming a bearish Shooting Star Japanese candlestick reversal pattern (red-shaded rectangle on chart below) as it peaked on October 31. 

EUR/AUD Daily Chart 

In addition, a bearish down-day followed the day of the Shooting Star and added confirmation. 

Since then, EUR/AUD has continued selling off and there is evidence it is now in a short-term downtrend. Given the principle that “the trend is your friend” the odds favor a continuation lower. 

The next target is at 1.6400 and the 200-day Simple Moving Average (SMA), followed by the cluster of major SMAs underneath at around the 1.6350s. 

The pair may have completed an “abc” three-wave Measured Move pattern at the October 31 highs, further adding to the evidence a down cycle is likely taking over. 

• The US Dollar price action is rather muted as the US heads to the voting booths on Tuesday. 
• Traders brace for volatility as it could take days or weeks to know who will be the next US president in case of a very tight result.
• The US Dollar index trades just below 104.00 and hangs onto important technical support. 

The US Dollar (USD) steadies on Tuesday, with the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trading just below 104.00 and hanging onto important technical support as markets brace for the US presidential election. Chances that markets will know if either Vice President Kamala Harris or former US President Donald Trump will claim victory by Wednesday look rather slim. No less than 165 lawsuits have already been filed on election fraud and recount requests even before the voting has started. 

This could mean that this 60th presidential election could surpass the 46 days of legal uncertainty last seen when George W. Bush won in 2000. Only a landslide victory by several points could avoid a legal battle that would plunge markets into uncertainty going into year-end. 

The US economic calendar includes the final readings of the S&P Global and the Institute for Supply Management (ISM) Services Purchase Managers Index (PMI) for October. No real changes are expected from preliminary readings.

Daily digest market movers: Harris vs. Trump showdown

• Look out for headlines risk on Tuesday and Wednesday in case no clear winner is declared in the 60th US presidential election. 
• At 13:45 GMT, S&P Global is set to release the final reading for October’s PMI. Services PMI is expected to remain unchanged from the preliminary reading of 55.3, while the Composite PMI is expected to remain stable at 54.3.
• At 15:00 GMT, the ISM is releasing its final reading for October’s services sector. The ISM Services PMI is expected to decline a touch to 53.8 from 54.9.
• Ahead of the first possible headlines on the US presidential election, the US Treasury is auctioning a 10-year note around 18:00 GMT. 
• Asia did well on Tuesday, with Japanese and Chinese indices closing in the green. European equities look sluggish ahead of the US presidential elections, while US equity futures are showing mild positive numbers.   
• The CME FedWatch Tool is backing a 25 basis point (bps) interest-rate cut by the Federal Reserve (Fed) on Thursday’s meeting with a 98.0% probability. More interesting is the December 18 meeting, where a 50 bps interest-rate cut from the current level is expected by an 81.7% chance, suggesting that markets anticipate a rate cut this week and in December. 
• 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: On the edge of your seat

The US Dollar Index (DXY) is having its calm moment before the storm. It looks to be very unpredictable what the US presidential election outcome will be on Wednesday when the world will wake up. The DXY is clinging onto the 200-day Simple Moving Average (SMA) at 103.84, and it is expected to whipsaw through it in the next 24 hours once results come in. 

The DXY has given up two key levels and needs to regain control of them before considering recovering toward 105.00 and higher. First up is the 200-day SMA at 103.84, together with the 104.00 big figure. The second element is the October 29 high at 104.63. 

On the downside, the 100-day SMA at 103.12 and the pivotal level of 103.18 ( March 12 high) are the first line of defence. In case of rapid and volatile moves this week, look for 101.90 and the 55-day SMA at 102.16 to consider as substantial support. If that level snaps, an excursion below 101.00 could be possible. 

US Dollar Index: Daily Chart

• USD/CHF is showing increasing evidence it might be reversing trend. 
• It has formed a bearish Two-Bar reversal pattern and has broken the uptrend’s trendline three times. 

USD/CHF looks like it is reversing the uptrend of the last five weeks. The technical evidence is building for the case the pair is beginning a new short-term downtrend. 

USD/CHF Daily Chart 

USD/CHF has formed a bearish Two-Bar reversal pattern (red-border rectangle on chart above) on Monday and Friday. These patterns occur at the end of an uptrend when a longer-than-average long, green candle is followed by a similar length and shape bearish red candle. The pattern indicates a reversal in sentiment. It usually denotes near-term weakness at the very least, more often than not a reversal of trend.

Further the trendline for the rally during October has been broken and redrawn three times (see 4-hour chart below for more detail) and this is another sign of a possible reversal according to technical analysis theory. 

USD/CHF 4-hour Chart

A break below the 0.8615 November 4 low would provide final confirmation of more downside to come and probable establishment of a downtrending bias. Such a break might reach the next target at around 0.8550 where the 50-day Simple Moving Average is located. 

According to a Reuters survey, oil production in Iraq fell to just under 4 million barrels per day in October, thus meeting the requirements of the OPEC+ agreement without taking the promised compensatory cuts into account.

Total OPEC oil production rises

“For the first time since the beginning of the year, the survey also showed that production in the nine countries bound by quotas (OPEC-9) was at the agreed level. Total OPEC oil production, by contrast, rose by 190,000 barrels per day because production in Libya normalised again after the outages in the previous two months.”

“The situation is similar in the Bloomberg survey. Here, too, total OPEC production rose, while production by the OPEC-9 fell. However, in this survey, Iraq's production was still 120,000 barrels per day above the agreed level.”

The OPEC Secretariat announced over the weekend that the voluntary production cuts of eight OPEC+ countries would be maintained in full until the end of the year. In addition, the countries have committed to strict implementation of the promised production cuts, including compensatory cuts to offset previous overproduction, Commerzbank’s commodity analyst Carsten Fritsch notes.

OPEC+ productions cut to be maintained

“It had already been hinted last week that the gradual increase in production planned for next month would be postponed again. Therefore, this was no longer a big surprise. An increase in supply in December would have risked triggering a decline in oil prices, even if the monthly production increase of 180,000 barrels per day had been small.”

“The signal alone and the prospect of further production increases in the following months would probably have been enough to put oil prices under pressure. The next regular OPEC+ meeting will take place on 1 December, when a decision is to be taken on oil production in the first half of 2025. Given weakening demand and rising oil supply outside OPEC+, there is no scope for OPEC+ to expand production without risking oversupply and a price decline.”

“Therefore, OPEC+ is unlikely to have much of a choice in a month's time other than to postpone the production increase again. Yesterday, the OPEC Secretary General was very optimistic about oil demand. However, if the demand outlook is indeed so positive, there would have been no need to postpone the planned gradual withdrawal of the voluntary production cuts.”

Gold demand in India rose last week due to the festivals of Dhanteras (29 October) and Diwali (31 October), Commerzbank’s commodity analyst Carsten Fritsch notes.

Gold demand weakens again

“However, due to the record high prices, the increase was smaller than usual, as Gold traders reported. Taking into account the much higher price level, however, the value of sales was significantly higher, according to one trader.”

“The share of bars and coins in total sales was higher than usual, as many buyers were not willing to pay the increased production costs for Gold jewellery.”

“Towards the end of the week, demand apparently weakened again, which is why traders offered a discount of $5 per troy ounce on the official price. Just a few days earlier, they were still charging a premium of $1.”

The gold price has retreated somewhat from its record level of the previous week and is trading at around $2,740 per troy ounce, Commerzbank’s commodity analyst Carsten Fritsch notes.

The focus is on US presidential election

“The polls predict a neck-and-neck race between Democratic Vice President Kamala Harris and Republican former President Donald Trump. Trump's lead in the betting markets has narrowed considerably of late. This would also reduce the tailwind for gold, as inflation is likely to be higher under Trump than under Harris.”

“Moreover, there would be a risk with Trump that the independence of the US Federal Reserve would be called into question, making it more difficult for the Fed to respond to higher inflation with an appropriate monetary policy. Therefore, a Trump victory would likely result in a rising gold price. By contrast, a Harris victory would put gold under pressure. Should the election result be uncertain for days or even weeks, gold would benefit from the resulting uncertainty.”

“The Fed meeting on Wednesday and Thursday is clearly overshadowed by the US elections and is therefore unlikely to have any significant impact on the gold price. A 25 basis point interest rate cut is fully priced in. In addition, Fed Chairman Jerome Powell is likely to hold out the prospect of further rate cuts at the subsequent press conference. No major surprises are expected from the meeting.”

• Crude Oil tries to head to $72.00 after increasing more than 3% on Monday. 
• Tropical storm Rafael is set to hit a production-sensitive region which could reduce US output by around 1.7 million barrels per day. 
• The US Dollar Index is flatlining while the US is heading into election day to choose its next president. 

Crude Oil price ticks up on Tuesday for a second consecutive day, further banking on the delay in Oil production normalization by OPEC+. Lower supply could also be on the cards due to chances of disruption in the US Gulf region as  tropical storm Rafael is making its way to the oil rigs and could take out 1.7 million barrels per day from production. Meanwhile, Saudi Aramco – the biggest state-owned oil producing company from Saudi Arabia – has posted a 15% drop in quarterly profit, adding to chances that Saudi Arabia urges OPEC+ to do more in limiting supply.  

The US Dollar Index (DXY), which tracks the performance of the Greenback against six other currencies, is trading sideways as US citizens are heading to the voting booths to choose their next president. Chances that by Wednesday markets will know if Vice President Kamala Harris or former President Donald Trump will be the next president are very slim. Over 100 court cases and litigation efforts could kick in in case there is no clear- winner, a scenario that could throw the US into weeks or months of political uncertainty. 

At the time of writing, Crude Oil (WTI) trades at $71.60 and Brent Crude at $75.40.

Oil news and market movers: Bullish elements helping out

• Tropical Storm Rafael is on a path that could intersect in the next five days with BP, Shell, Occidental, and Chevron rigs in the US Gulf region, based on data from the Bureau of Ocean Energy Management and the National Hurricane Center, Bloomberg calculates. Roughly 1.7 million barrels per day would be taken out of production. 
• Energy giant Saudi Aramco reported a 15% year-on-year drop in third-quarter profit on Tuesday, citing low Oil prices. The fall in net income to $27.56 billion this year from $32.58 billion in 2023 "was mainly due to the impact of lower crude oil prices and weakening refining margins", the firm said in a statement posted to the Saudi stock exchange, Bloomberg reports.
• The Kashagan field in Kazaskhstan reached full Oil production capacity on Sunday after repairs that lasted from October 7 to 28. The news was confirmed by the Ministry of Energy of the Republic and reported to Interfax. With the reopening, the overall Oil production for the republic has been revised to 88 million tons against the 90.5 million tons for 2024 previously estimated.

Oil Technical Analysis: Hit where it hurts

Crude Oil prices could rally further now that Saudi Arabia is being hit where it hurts: earnings and income. With the 15% decline in quarterly earnings, alarm bells must be going off at the ministry of Energy in the oil state. Saudi Arabia could use its influence in OPEC+ to jack up Oil prices by limiting production in order to recoup incurred losses due to the lower Oil prices. 

On the upside, the hefty technical level at $74.40, with the 100-day Simple Moving Average (SMA) and a few pivotal lines, is the next big hurdle ahead. The 200-day SMA at $76.85 is still quite far off, although it could get tested in case tensions in the Middle East pick up again. 

Very near, though possibly even more important, is the 55-day SMA at $70.90, which should be able to resist any selling pressure. For more 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

• Gold steadies on Tuesday, having reached a new five-day low earlier in the day as the US presidential election remains a question-mark event. 
• The election could be polarizing for the US Dollar, impacting Gold, or even be a “win-win” for the precious metal. 
• Technically, there are signs XAU/USD is entering a short-term downtrend. 

Gold (XAU/USD) continues to backslide from its record high, eventually finding support at $2,724 early on Tuesday and bouncing back to regain the $2,740s. A marginally weaker US Dollar (USD) due to uncertainty over the US presidential election result is aiding Gold in its rebound, since the precious metal is mostly priced and traded in USD. 

This comes as markets increasingly view the final result of the election as polarizing for the US currency, with a victory for Republican nominee Donald Trump USD-bullish but the opposite for Democrat nominee Kamala Harris.

Simmering tensions in the Middle East also keep Gold supported, after Iran's supreme leader, Ayatollah Ali Khamenei, said that the US and Israel "will definitely receive a crushing response," to Israel’s attack last month. Further, overweight long-positioning from trend-following hedge funds is also helping the yellow metal sustain its current highs.

Gold rises ahead of US presidential election result

Gold rises from safety flows due to the high level of uncertainty regarding the outcome of the US presidential election, which regardless of the winner alone can be bullish for the yellow metal. 

“Regardless of the outcome, significant political shifts can unsettle financial markets, and such uncertainty typically fuels volatility, and both can serve as catalysts for higher Gold prices,” says Matthew Jones, precious metals analyst at Solomon Global. 

The highly-rated election forecaster 538.com indicates a 50% probability of Vice President Harris winning on Tuesday whilst former President Donald Trump has a 49% chance of victory. That leaves a 1% chance of no overall winner. Over the last 24 hours, Harris has edged into the lead after lagging Trump for several days. This may also explain Gold’s turnaround on Tuesday.

Solomon’s Jones is bullish on Gold overall, seeing the election outcome as a “win-win” for the precious metal regardless of which candidate is victorious. 

A Trump in the White House would lead to “inflationary pressures and geopolitical tensions,” according to the analyst, which could, “amplify Gold’s appeal as a safe-haven asset, driving demand upward.”

On the other hand, if Harris wins, the Democrat nominee “has outlined a vision marked by robust government expenditure on social programs, infrastructure, and climate initiatives,” writes Jones, adding that these policies “may exacerbate budget deficits, potentially weakening the (US) Dollar and stoking inflation fears. Investors could increasingly turn to Gold as a hedge (...) pushing prices higher.”

Technical Analysis: Short-term trend might have reversed

Gold could be showing signs of reversing its short-term uptrend as it continues steadily leaking lower. 

XAU/USD 4-hour Chart

Although the precious metal remains in an uptrend on a medium and long-term basis, the establishment of a sequence of falling peaks and troughs on the 4-hour chart could be one of the first signs of a short-term downtrend taking root. Given the technical principle that “the trend is your friend,” this now might tilt the odds in favor of even more downside in the near term. 

A break below the $2,724 day’s lows would add further confirmation to the short-term downtrend thesis and probably see prices fall to the bottom of the recent range at $2,709.

The Relative Strength Index (RSI) is also showing bearish divergence (red dashed lines on chart) when comparing the current price level to that on October 23. The RSI is lower than it was on October 23, whilst price remains higher, and this indicates underlying selling pressure is strong.

Alternatively, given the medium and long-term bullish trends, it is also possible that a recovery could unfold. In such a scenario, a break above the all-time high of $2,790 would probably lead to a move up to resistance at $2,800 (whole number and psychological number), followed by $2,850. 

• AUD/USD jumps strongly to near 0.6620 as the RBA favors hawkish guidance on interest rates due to persistent inflation risks.
• Investors await the US presidential elections and the Fed’s policy meeting.
• Traders expect a tough competition between Kamala Harris and Donald Trump.

The AUD/USD pair revisits more than a week high of 0.6620 in European trading hours on Tuesday. The Aussie pair gains as the Australian Dollar (AUD) strengthens after the Reserve Bank of Australia (RBA) delivers a hawkish interest rate guidance, while leaving its Official Cash Rate (OCR) unchanged at 4.35%, which was widely anticipated.

RBA Governor Michelle Bullock emphasized the need to maintain a restrictive interest rate stance amid persistence of upside risks to inflationary pressures. She supported to keep interest rates steady until the economy turns down more than expected.

Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range,” the RBA said in a statement. The central bank added that underlying inflation still remained “too high.” 

Meanwhile, the outlook of the Aussie pair is expected to be guided by United States (US) presidential elections for which traders are uncertain about the likely winner between Republican candidate Donald Trump and Democratic rival Kamala Harris. Trump’s victory is expected to be unfavorable for the Australian Dollar as he vowed to raise tariffs by upto 60% on China if he wins. This will have a significant impact on Australian exports as it is the leading trading partner of China.

This week, investors will also pay close attention to the Federal Reserve’s (Fed) policy meeting, which is scheduled for Thursday. The Fed is widely anticipated to cut interest rates by 25 basis points (bps) to 4.50%-4.75%. This would be the second interest rate cut by the Fed in a row.

• Silver price stays above $32.30 ahead of US presidential elections.
• US Trump’s victory could be beneficial for the US Dollar and bond yields.
• Investors will also focus on the US ISM Services PMI for October.

Silver price (XAG/USD) jumps to near $32.60 in Tuesday’s European session. The white metal remains broadly sideways above the key support of $32.30 ahead of the United States (US) presidential elections, which will start in the New York session. The asset is expected to face sharp volatility after agencies will start providing exit polls.

Traders expect a neck-to-neck competition between former US President Donald Trump and Democratic candidate Kamala Harris. The outlook on precious metals relies heavily on the US election outcome. Trump's victory could be unfavorable for precious metals, such as Silver, as he vowed to raise tariffs on imports and trim corporate taxes, which will escalate price pressures.

The scenario that will improve the outlook of the US Dollar and bond yields in an inflationary environment will prompt the need for a restrictive interest rate stance by the Federal Reserve (Fed).

Ahead of US elections, the US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, edges lower to near 103.70 but remains inside Monday’s trading range. 10-year US Treasury yields wobble near 4.3%.

In Tuesday’s session, investors will also focus on the US ISM Services PMI data for October, which will be published at 15:00 GMT. The agency is expected to show that activities in the services sector expanded at a slower pace, with the index seen at 53.8 against 54.9 in September.

Silver technical analysis

Silver price strives to gain ground 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 wobbles near the 20-day Exponential Moving Average (EMA), which trades 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

As Americans head to the polls to elect the 47th President of the United States, betting odds suggest that Vice President Kamala Harris is facing an uphill battle against former President Donald Trump.

Over the weekend, one of the major betting platforms, PredictIt, showed that Harris became the slight favorite to win the US presidential election, surpassing Trump for the first time since early October. This lead, however, remained short-lived as Trump moved to the top again on the platform, albeit with a small margin.

Although US presidential election betting odds should not be taken as a representative view of US voters, they might still trigger a reaction in financial markets. Unlike PredictIt, RealCelarPolling's average for betting odds currently has Trump with at a comfortable lead against Harris, 57.7 vs 40.7.

Source: RealClearPolling.com

In the meantime, election polls point to a much tighter race than what betting odds suggest. The TIPP poll has Trump and Harris tied at 48 in nationwide, the Ipsos poll has Harris leading by two points, 50 vs 48, and the Atlas Intel poll has Trump having a one point lead, 50 vs 49, as per RealClearPolling. In some swing states, such as Arizona and North Carolina, Trump seems to be staying on top, while Harris seems to have closed the gap in others, such as Nevada, Georgia and Pennsylvania.

• EUR/USD wobbles near 1.0900 ahead of the US presidential election, which will influence market sentiment.
• Investors expect a neck-to-neck competition between Kamala Harris and Donald Trump.
• The ECB is expected to cut interest rates by 25 bps in the December meeting.

EUR/USD consolidates around 1.0890 in Tuesday’s European session. The major currency pair remains shy of the key resistance of 1.0900 on the United States (US) presidential election day. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades steadily near 103.80 at the time of writing. 

The Greenback exhibited a strong buying trend in October as traders were pricing in former US President Donald Trump’s victory. However, it struggles to extend its upside further as traders expect tough competition between Trump and current Vice President Kamala Harris now. The likelihood of Trump’s victory has witnessed a pullback after the Des Moines Register/Mediacom Poll showed Harris gaining a slight lead of three points in Iowa state, where the Republican party gained a clear majority in 2016 and 2020.

“A Red Wave (favoring Republicans) would kick-start a sizeable USD rally. It would rekindle memories of US Exceptionalism, anchored by tariffs, tax cuts, deregulation, and negative impacts on the outlook for EZ and China," according to analysts at TD Securities.

While the US presidential election will be the key event for the US Dollar this week, investors will also pay close attention to the Federal Reserve’s (Fed) monetary policy decision, which will be announced on Thursday. The Fed is expected to reduce interest rates by 25 basis points (bps) to 4.50%-4.75%, according to the CME FedWatch tool. Investors will focus on Fed Chair Jerome Powell's speech for fresh cues over likely monetary policy action in December.

On the economic data front, investors await the US ISM Services Purchasing Managers Index (PMI) data for October, which will be published at 15:00 GMT. The Services PMI is estimated to come in at 53.8, lower than 54.9 in September, suggesting that the activities in the service sector expanded but at a slower pace.

Daily digest market movers: EUR/USD remains flat-lined on the Euro’s mixed performance

• EUR/USD trades inside Monday’s trading range as investors sideline ahead of the opening of polls for US election voting. The major currency pair is expected to be mainly guided by the US Dollar in an event-packed week. 
• While the Euro (EUR) struggles for direction against the US Dollar, it performs weakly against Asia-Pacific currencies after upbeat Caixin Manufacturing and Services PMI. Still, it outperforms other major currencies as traders pare European Central Bank (ECB) dovish bets.
• Market participants expect the ECB to cut the Deposit Facility Rate again in December by a usual size of 25 bps. Earlier, investors were anticipating a 50-bps interest rate cut by the ECB in its last policy meeting of the year as few officials highlighted growing risks to economic growth and emphasized the need for large economic stimulus to boost domestic spending and investment.
• ECB’s large rate cut bets diminished after better-than-expected Eurozone Q3 Gross Domestic Product (GDP) growth, which receded fears of an economic downturn. Meanwhile, revised German and Eurozone HCOB Manufacturing PMI estimates have improved against flash readings. However, the manufacturing output index remained below the 50.0 threshold, suggesting that the contraction trend remains intact.

Technical Analysis: EUR/USD remains shy of 1.0900

EUR/USD struggles for an establishment above the immediate resistance of 1.0900, which also aligns with the 200-day Exponential Moving Average (EMA). The pair rebounded sharply towards the end of October after gaining a firm footing near an 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 some signs of a bullish reversal. However, this will only be confirmed if the RSI (14) climbs above 60.0 decisively.

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

The Reserve Bank of Australia left its cash rate unchanged at 4.35% this morning. Most economists, as well as the market, were expecting no change. As a result, the Aussie's reaction to the meeting was muted. Despite the unchanged policy rate however, there were a few interesting points to take away from the communiqué and press conference, Commerzbank’s FX analyst Volkmar Baur notes.

Aussie can come under pressure next year

“For one, the RBA had said in September that it would wait until inflation was back within the central bank's target range. Now they have added the word 'sustainably'. So they now want to wait for inflation to return ‘sustainably’ to the target range. This could mean that they are still waiting for core inflation to fall below 3% per annum. Since, although inflation itself fell below 3% in the third quarter, this was largely due to lower energy prices. On the other hand, it could also be that they just want to buy some time to wait and see.”

“The labour market is still very strong and is creating significantly more jobs each month than before the pandemic. This is leading to continued high wage growth, which is putting further pressure on inflation, especially in services. It is therefore also possible that this 'sustainable' view on inflation indicates that inflation is indeed seen to be on the right track, but that the labour market remains the sticking point, which is why inflation risks are still seen to be on the upside.”

“We can expect the Reserve Bank of Australia to pay more attention to the labour market in the coming months, with a view to cutting interest rates in response to any weakening. As long as inflation does not pick up again significantly, it is likely to recede somewhat as an indicator of future RBA policy. And since I expect the Australian economy to slow next year, the RBA is likely to cut rates before May 2025, the date currently priced in by the market. The Aussie could therefore come under pressure next year.”

While the US goes to the polls today and will presumably be busy counting votes for the rest of the week, the Standing Committee of the National People's Congress is meeting in China this week to discuss the fiscal package announced at the end of September, Commerzbank’s FX analyst Volkmar Baur notes.

US election to play a greater role here in the coming days

“The meeting should actually have taken place at the end of October, but has been postponed to the beginning of November, which has the advantage of allowing a flexible response to the outcome of the US election. It is at least suspected that the fiscal package could be larger if Trump is elected due to the threat of tariffs on Chinese goods than if the Democrats win. Whatever the case, they will try to make the package sound as large as possible.”

“According to media reports, up to RMB 10 trillion is planned, which would correspond to around 7.7% of China's GDP. However, a large part of this is only intended for debt restructuring, so it should have no direct effect on the economy. And the rest will probably be spread over 5 years, further reducing the impact.”

“However, it must be admitted that the Chinese leadership is adept at keeping secrets. There is certainly great potential for surprises when the fiscal package is presented on Friday. In the short term, the CNY could therefore enter the coming week with new tailwind. However, the outcome of the US election is likely to play the greater role here in the coming days.”

Instead of continuing to weaken, the US Dollar (USD) is likely to trade in a range between 7.1000 and 7.1250. In the longer run, increasing momentum and breach of 7.1000 support level suggests USD is likely to decline further, potentially to 7.0660, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

USD is likely to decline further

24-HOUR VIEW: “After USD gapped lower in early Sydney trade yesterday, we indicated that ‘The sharp drop appears to be running ahead of itself, but there is room for USD to drop further to 7.1000 before stabilisation is likely.’ We did not expect USD to easily break below 7.1000 and plummet to a low of 7.0876. USD rebounded from the low, closing lower by 0.41% at 7.1103. The rebound in oversold conditions suggests that instead of continuing to weaken, USD is likely to trade in a range today, probably between 7.1000 and 7.1250.”

1-3 WEEKS VIEW: “In our most recent narrative from last Friday (01 Nov, spot at 7.1650), we noted that USD ‘is under mild downward pressure.’ We indicated that it ‘it could edge lower, but any decline is expected to encounter solid support at 7.1000.’ In a sudden move yesterday, USD broke below 7.1000, reaching a low of 7.0876. USD closed lower by -0.41% at 7.1103, its biggest one-day drop in six weeks. The increasing downward momentum, combined with the breach of 7.1000, suggests USD is likely to decline further, potentially to 7.0660. To keep the momentum going, USD must remain below 7.1380 (‘strong resistance’ level previously at 7.1480).”

In 1845, the US Congress decreed that presidential elections should always be held on the first Tuesday after the first Monday in November. The date was chosen to fall after the autumn harvest but before the onset of winter, which could make travel difficult. It also had to be a Tuesday so that people could use the Monday to travel. And so it is that today we are all looking to the US to give us our first idea of how the election will turn out. And why some of us will either be going to bed very late tonight or getting up very early tomorrow, Commerzbank’s FX analyst Volkmar Baur notes.

All eyes on US elections

“If Harris wins, expect temporary USD weakness. If Trump wins, the opposite is true. And while the first polls will close at 11pm GMT, in Georgia, the first potential swing state, voting lasts until Midnight. More information will come in when North Carolina and Ohio close there polls at 0:30am. And in the first ‘must-win’ states such as Pennsylvania and Michigan voting will go on until at 2am.”

“On the other hand, there is nothing really new to say as the polls have not even opened yet and the forecasts are telling us no more than they have for the past few days: it simply will be very close. As such, the currency market is likely to be in a bit of a wait and see mode today.”

“Everyone will sit tight through the night and not make any big bets. Those who needed to hedge should have done so by now, and those who are sure of themselves have probably already taken their positions. So for today, all we can do is wait.”

The US Dollar (USD) is expected to trade in a range, probably between 151.75 and 152.75. In the longer run, 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 to trade between 151.75 and 152.75

24-HOUR VIEW: “Yesterday, when USD was at 152.10, we expected it to ‘trade with a downward bias.’ However, we pointed out that ‘as momentum is not strong, any decline is unlikely to break clearly below 151.50.’ We also pointed out that ‘the major support at 151.05 is unlikely to come under threat.’ Our view was not wrong, as USD fell to 151.54, rebounding to close at 152.13. The rebound in slowing momentum suggests the downward bias has eased. Today, we expect USD to trade in a range, probably between 151.75 and 152.75.”

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.’ Yesterday (Monday), USD fell to a low of 151.54. There has been a slight increase in momentum, and it remains to be seen if USD can break clearly below 151.05. Overall, only a breach of 153.35 (no change in ‘strong resistance’ level) would mean that the chance of a break below 151.05 has faded.”

Inflation in Turkey surprised slightly to the upside yesterday (2.9% MoM vs 2.5% expected). Although the year-on-year reading continues to fall further, slower disinflation may again weigh on the Central Bank of Turkey's caution in the timing of the first rate cut. Markets still expect a first cut in December but Friday's inflation report and the Governor's presentation could tell us more, ING’s FX analyst Frantisek Taborsky notes.

CEE market remains volatile

“TRY remains unchanged and the US election doesn't seem to change the set trajectory either. Market pricing of rate cuts is gradually shifting from this year to next year. Although the market reacted little to the higher inflation number, we will likely see more repricing later. Despite further upside surprises in inflation and the postponement of the first rate cut, it is clear that we are approaching a period where rate cuts will be on the table.

“Although the US election should not affect the TRY market, we believe it is safer to be in the spot market for carry collection in FX, while forwards may prove more volatile in current conditions. Elsewhere in the region today, the calendar is empty. The Central and Eastern Europe (CEE) market remains significantly volatile with yesterday's strong rally in PLN assets.”

“Although FX across the region saw buyers yesterday morning, following the EUR/USD move higher, it closed almost unchanged at the end of the day. On the other hand, rates and bonds saw some rallies, especially in the PLN market, which after last week's sell-off may seem like the cheapest option in case of a Harris victory in the US election. Thus, today should be in a similar fashion as a last chance to adjust positions before the risk event.”

The New Zealand Dollar (NZD) is expected to continue to trade in a range, albeit a lower one of 0.5955/0.5995. 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.

May try to reach 0.6040

24-HOUR VIEW: “We expected NZD to trade in a choppy manner between 0.5865 and 0.6015 yesterday. NZD subsequently traded in a narrower range than expected (0.5973/0.6016). Further range trading appears likely, even though the slightly softened underlying tone suggest a lower range of 0.5955/0.5995.”

1-3 WEEKS VIEW: “We revised our NZD outlook from negative to neutral yesterday (04 Nov, spot at 0.5985), indicating that ‘the weakness in NZD from early last month has ended.’ We also indicated that NZD ‘has likely entered a range trading phase and is expected to trade between 0.5940 and 0.6040 for now.’ There is no change in our view.”

Silver prices (XAG/USD) rose on Tuesday, according to FXStreet data. Silver trades at $32.65 per troy ounce, up 0.44% from the $32.50 it cost on Monday.

Silver prices have increased by 37.19% 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 84.02 on Tuesday, down from 84.22 on Monday.

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

The US Dollar started the week under heavy selling pressure after one of the major betting platforms, PredictIt, showed that Kamala Harris became the slight favorite over the weekend to win the US presidential election. 

Although US presidential election betting odds should not be taken as a representative view of US voters, they might still drive the market sentiment.

On the day of the US presidential election, PredictIt has Donald Trump back in the lead, albeit with a small margin. Other platforms point to much stronger odds for Trump to win. RealCelarPolling's average for betting odds currently has Trump at 57.7 and Harris at 40.7.

Source: RealClearPolling.com

Meanwhile, polls suggest that the race will be much closer than what betting odds point to. The TIPP poll has Trump and Harris tied at 48 in nationwide, the Ipsos poll has Harris leading by two points, 50 vs 48, and the Atlas Intel poll has Trump having a one point lead, 50 vs 49, as per RealClearPolling. In some swing states, such as Arizona and North Carolina, Trump seems to be staying on top, while Harris seems to have closed the gap in others, such as Nevada, Georgia and Pennsylvania. 

Follow our live coverage of the market reaction to the US presidential election as counting results start hitting the wires.

It is not a surprise to hear of some hedge funds buying AUD/USD call spreads structures in the FX options market, ING’s FX analyst Chris Turner notes.

AUD/USD to deliver gains if Harris wins

“The Australian Dollar (AUD) could be the big winner should Harris keep Trump out of the White House. Under such a scenario, the China tariff threat would be reduced considerably. At the same time, Chinese asset markets are starting to perform a little better on the recent stimulus measures – as well as in anticipation of some further fiscal stimulus details emerging from China this week.”

“At the same time, the Reserve Bank of Australia seems in no mood to join its peers in easing policy. Last night's policy meeting led with a message that underlying inflation is too high, even though it was forecast marginally lower at 2.8% by the end of next year.” 

“As such it would be no surprise to see AUD/USD deliver some substantial gains were Harris to win this week.”

• The Mexican Peso trades in a range as traders await news of the US presidential election. 
• The winner could have a significant impact on the Peso in the days to come.
• Technically, USD/MXN continues to trade below the opening chart gap it formed when it broke lower on Monday.  

The Mexican Peso (MXN) fluctuates between tepid gains and losses on Tuesday as traders await with bated breath the outcome of the US presidential election, an important driver of the Peso over the coming days. 

If the Democrat nominee Kamala Harris wins, it is expected to be positive for the Peso, whilst if the Republican nominee Donald Trump is victorious, the impact is likely to be negative, according to financial news website El Financiero. The difference is due to Trump’s threat to place tariffs on Mexican imports. 

The highly-esteemed election forecaster 538.com indicates the probability of Vice President Harris winning is 50%, whilst former President Donald Trump has a 49% chance of victory and a 1% chance of no overall winner. Over the last 24 hours, Harris has snuck into the lead after lagging Trump for several days. This may explain the Peso’s strengthening across its main pairs on Monday. 

Mexican Peso: Four US presidential election scenarios

The Mexican Peso exchange rate with the US Dollar (USD) is foreseen to fluctuate between a low of 18.30 and a high of 22.26 depending on the outcome of the US presidential election, says El Financiero.

The graphic below shows the USD/MXN in four possible US presidential election scenarios.

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

If Trump wins with 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 but fails to get a majority in Congress, USD/MXN is likely to fluctuate between 18.80 and 19.40. 

If Trump wins without a Republican majority in Congress, the pair is likely to end up in a range between 19.70 and 21.14. 

Mexican Peso prepares for the Supreme Court vs. Sheinbaum

The Mexican Peso could face material risk from domestic political factors in the coming days as the Mexican Supreme Court decides on Tuesday whether a controversial law to reform the legal system is unconstitutional. 

The reform – which has already been voted through parliament – seeks the election of judges by popular vote rather than appointment. Supporters say it will eliminate corruption. Critics argue it will undermine the independence of the judiciary and hand the government too much power.

Mexican President Claudia Sheinbaum said she would await the Supreme Court's decision but added, “It has to be made very clear that eight justices cannot be above the people,” at a press conference on Monday. 

Supreme Court judge and critic of the reform Juan Luis González Alcántara recently proposed a compromise that would limit the election of judges to only those of the Supreme Court and not the thousands of lower court judges in Mexico. 

Anticipating delays to its proposed reforms, the Mexican parliament recently passed another law that prevents the courts from blocking the implementation of legislation. So, even if the Supreme Court decides against the implementation of the reform on Tuesday, the government may just ignore their decision and press ahead regardless. 

This would lead Mexico into uncharted territory constitutionally, according to experts, with potential implications for the economy and the foreign investor confidence in the country’s courts going forward. 

“This will lead to a constitutional crisis of a kind we have not seen for the duration of the 1917 constitution,” Olvera Rangel, a professor of law at the Universidad Nacional Autónoma de México (UNAM), was quoted as saying in The Guardian.

Technical Analysis: USD/MXN leaves gap open as it ranges

USD/MXN trades below the gap down it formed on Monday (orange shaded rectangle on the chart below). The gap formed after the pair completed a bullish Measured Move, or “abc” pattern last week. 

USD/MXN 4-hour Chart 

USD/MXN is still probably in an overall 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, therefore, favor a continuation higher. 

Further, gaps do not tend to remain open for long, according to technical analysis, and this suggests a mild bias for prices to rise and close the gap over coming sessions. 

Month-long Australian Dollar (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.

Rangebound within 0.6535/0.6655 for now

24-HOUR VIEW: “While we expected AUD to ‘trade with an upward bias’ yesterday, we pointed out that “any advance is expected to face strong resistance at 0.6620. Our view was not wrong, as AUD subsequently rose to 0.6619 and then pulled back to trade mostly sideways. The upward pressure has faded, and instead of trading with an upward bias today, AUD is more likely to trade in a sideways range of 0.6565/0.6605.”

1-3 WEEKS VIEW: “After holding a negative view in AUD since early last month, we highlighted yesterday (04 Nov, spot at 0.6585) that ‘the month-long AUD weakness has stabilised.’ We expected AUD to ‘trade in a 0.6535/0.6655 range for now.’ We continue to hold the same view.”

• USD/CAD loses ground as commodity-linked CAD might have received support from the steady Oil prices.
• Improved US Treasury yields could limit the downside of the US Dollar.
• Traders will likely observe the BoC Summary of Deliberations and the Ivey PMI data to gain ideas on policy outlook.

USD/CAD extends its losses for the second successive session, trading around 1.3880 during European hours on Tuesday. The commodity-linked Canadian Dollar (CAD) might have received support from the steady Oil prices as Canada is the largest Oil exporter to the United States (USD).

West Texas Intermediate (WTI) Oil price maintains its position around $71.50 per barrel at the time of writing. Crude Oil prices remain steady as traders adopt caution amid increased uncertainties surrounding the results of the US presidential election on Tuesday.

Former President Donald Trump and Vice President Kamala Harris both predicted victory as they campaigned across Pennsylvania on Monday in the final, frantic day of an exceptionally close US presidential election.

The opinion polls show that Trump and Harris are virtually even. The final winner may not be known for days after Tuesday’s vote. Trump has already indicated he may challenge any unfavorable result, as he did in 2020.

The US Dollar (USD) receives downward pressure ahead of the US election. However, improved US Treasury yields may limit the downside risk of the Greenback. The US Dollar Index (DXY), which measures the value of the US Dollar against its six major peers, trades around 103.80 with 2-year and 10-year yields on US Treasury bonds standing at 4.17% and 4.30%, respectively, at the time of writing.

On the CAD front, the Bank of Canada (BoC) is anticipated to implement a substantial rate cut at its final monetary policy meeting of the year in December. BoC Governor Tiff Macklem has indicated the possibility of another 50 basis points (bps) rate reduction.

Traders are expected to focus on Canada’s International Merchandise Trade data, including Imports and Exports, scheduled for release on Tuesday. On Wednesday, attention will shift to the BoC Summary of Deliberations and the Ivey Purchasing Managers Index (PMI) data.

EUR/USD is just about holding onto gains made over the last few days. Remember these gains have been delivered on the back of, i) some ECB pushback against a 50bp cut in December, ii) Friday's soft US jobs report and iii) yesterday's poll result in Iowa which suggested Harris might be performing better than expected, ING’s FX analyst Chris Turner notes.

FX options market is primed for a big move in EUR/USD

“And assuming that a clear election result emerges this week, we are primed to deliver new multi-quarter EUR/USD forecasts – having kept a multi-quarter profile from the fourth quarter onwards flat at 1.10 from April this year.”

“The threat of Trump and protectionism has sharpened the senses in European political circles and may be hurrying German political leaders to compromise on the budget side. But for this week, expect the fall-out from US elections to dominate.”

“Ultimately, a Trump win without the House could be the worst scenario for EUR/USD by late 2025, where global growth would be finding no insulation from US tax cuts and the ECB might be forced to cut rates deeper into accommodative territory. It is after the European close tonight, but let's see whether the ECB's Isabel Schabel again pushes back against a 50bp ECB cut in December. Currently the market prices 29bp of cuts.” 

• EUR/GBP consolidates as traders opt to wait on the sidelines ahead of the BoE on Thursday.
• Bets that the BoE will cut rates slowly underpin the GBP and act as a headwind for the cross.
• Diminishing odds for more aggressive ECB rate cuts lend support to the Euro and spot prices.

The EUR/GBP cross struggles to gain any meaningful traction and oscillates in a narrow trading band below the 0.8400 round-figure mark through the first half of the European session on Tuesday. Investors seem reluctant to place aggressive directional bets and opt to wait on the sidelines ahead of the pivotal Bank of England (BoE) policy decision on Thursday.

The UK central bank is widely expected to focus on a longer-term picture of slowing inflation and vote to cut interest rates for the second time this year. That said, expectations that UK Finance Minister Rachel Reeves' first budget would boost inflation and cause the BoE to cut interest rates more slowly turn out to be a key factor acting as a headwind for the EUR/GBP cross. The downside, however, remains cushioned in the wake of bets for a less dovish European Central Bank (ECB). 

Data released last week showed that inflation in the Eurozone rose to 2% in October. Furthermore, the better-than-expected GDP growth figures from the Eurozone's largest economies suggest that the ECB will stick to a 25 basis points (bps) interest rate cut at its next policy meeting in December. This, in turn, continues to underpin the shared currency and fails to assist the EUR/GBP cross to build on last week's breakout momentum beyond the 50-day Simple Moving Average (SMA). 

Investors also prefer to wait on the sidelines amid the uncertainty surrounding the US presidential election and ahead of ECB President Christine Lagarde's speech on Wednesday. Hence, it will be prudent to wait for strong follow-through buying before positioning for an extension of the EUR/GBP pair's recent bounce from sub-0.8300 levels.

The Pound Sterling (GBP) is expected to trade in a range between 1.2920 and 1.3000. In the longer run, for the time being, GBP is expected to trade in a 1.2900/1.3030 range, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

GBP is expected to trade in a 1.2900/1.3030 range

24-HOUR VIEW: “We expected GBP to trade in a range between 1.2890 and 1.2980 yesterday. GBP then traded in a narrower and higher range of 1.2935/1.2999. The price action appears be consolidative, and we continue to expect GBP to trade in a range, likely between 1.2920 and 1.3000.”

1-3 WEEKS VIEW: “Last Thursday, GBP plummeted to a low of 1.2845. In our update from 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.’ Yesterday, GBP broke above 1.2985, reaching a high of 1.2999. Downward momentum has faded, and for the time being, GBP is expected to trade in a 1.2900/1.3030 range.”

With an exceptionally close US election upon us, plus the outcome likely to deliver a binary impact on currency markets, the FX options market is trading at a respectful level of volatility, ING's FX analyst Chris Turner notes. 

US elections come too close for comfort

“Polls in the seven swing US states close around 03/0400 CET tomorrow morning and we would expect markets to be moving around that time. Given the run-up in the dollar in October, we think we need to see a Red Sweep for the dollar to push on much further. A Harris win would seem a benign outcome and prove a dollar negative – those three currencies: the euro, the Canadian and the Australian dollars could do well here.” 

“The more difficult outcome for the market would be Trump without the House of Representatives or a contested election. IMF analysis in its recent World Economic Outlook warned that the US economy could be 1% weaker than baseline in 2026 if Trump delivers on tariffs but could not offset it with tax cuts. For this reason, and given market positioning into the election, we think the dollar could come lower unless there is a Red Sweep.”

“Ahead of the election, today's US data calendar has ISM services for October. This is expected to soften a little. And were it not for the election, we believe this week's Fed meeting would also prove dollar negative too.”

As expected, the Reserve Bank of Australia (RBA) decided to leave its cash rate target unchanged at a 13-year high of 4.35%, UOB Group’s economist Lee Sue Ann notes.

First rate cut may not arrive until February meeting in 2025

“The Reserve Bank of Australia (RBA) kept rates at a 13-year high of 4.35% earlier today (5 November), as expected, and continued to emphasize ‘the need to remain vigilant to upside risks to inflation’.”

“The trimmed mean measure of inflation that the RBA pays most attention to will ease slightly faster than predicted, touching the top end of its 2%-3% band by Jun 2025 and reach the mid-point of 2.5% by the end of 2026.”

“There is still the possibility that the first rate cut will not arrive until its February meeting in 2025, if the RBA chooses to wait for the 4Q24 CPI print, due for release on 29 January 2025. In the meantime, we will continue to keep watch on upcoming data releases, including 3Q24 wage data (13 November); October labour market data (14 November), as well as monthly inflation readings for Oct (27 November).”

The Euro (EUR) is expected to consolidate between 1.0850 and 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.

EUR is likely to face resistance at 1.0935

24-HOUR VIEW: “We noted yesterday that ‘the outlook for EUR is mixed.’ We expected it to ‘trade sideways, likely staying within last Friday’s range of 1.0831/1.0905.’ EUR subsequently traded in a narrower and higher range of 1.0870/1.0914, closing at 1.0877 (+0.40%). The price movements did not result in any increase in either downward or upward momentum. The current price movements are likely part of a consolidation phase. Today, we expect EUR to trade between 1.0850 and 1.0905.”

1-3 WEEKS VIEW: “Our most recent narrative was from last Friday (01 Nov, spot at 1.0885), wherein ‘upward momentum is beginning to build, but any advance in EUR is likely to face significant resistance at 1.0935.’ Yesterday, EUR gapped higher upon opening. During London trade, it rose briefly to a fresh 3-week high of 1.0914 before pulling back to close at 1.0877. While we continue to expect EUR to advance, there has been no further increase in momentum, and it remains to be seen if it can break above 1.0935 in a sustained manner. On the downside, a breach of 1.0830 (‘strong support’ level previously at 1.0815) would mean that the current upward pressure has faded.”

• NZD/USD may test the upper boundary of the descending channel pattern near 0.6000.
• The 14-day RSI offers confirmation of the ongoing bearish bias.
• The immediate support appears at a three-month low at 0.5939.

The NZD/USD pair halts its two days of losses, trading around 0.5990 during Tuesday's early European session. Daily chart analysis indicates a bearish bias, with the pair moving within a descending channel. The 14-day Relative Strength Index (RSI), a key momentum indicator, remains below the 50 level, confirming the ongoing bearish sentiment.

Adding to this outlook, the nine-day Exponential Moving Average (EMA) remains below the 14-day EMA, reinforcing bearish sentiment for the NZD/USD pair. Short-term momentum remains weak, suggesting sustained downward pressure.

On the downside, NZD/USD may find its support around a three-month low at the 0.5939 level. A break below this level could lead the pair to test the lower boundary of the descending channel near 0.5910, followed by the psychological level of 0.5900 level.

On the resistance side, the NZD/USD tests the nine-day EMA at 0.5990 level, followed by the upper boundary of the descending channel near the 14-day EMA at 0.6010 level. A breakthrough above this level could support the pair to explore the region around the psychological level of 0.6100.

NZD/USD: Daily Chart

• The Pound Sterling trades sideways against the US Dollar in the countdown to the US election.
• Investors expect the Fed and the BoE to cut interest rates by 25 bps on Thursday.
• Market participants still assess the impact of the UK budget announcements on the country’s inflation outlook.

The Pound Sterling (GBP) trades in a very tight range around 1.2950 against the US Dollar (USD) in Tuesday’s London session. The GBP/USD pair consolidates ahead of the United States (US) presidential election, which will start in the North American session. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, also steadies near 103.80 after a sharp sell-off on Monday.

The Greenback went through a significant unwinding of long positions after the Des Moines Register/Mediacom Poll showed that current Vice President Kamala Harris leads former President Donald Trump by three points in Iowa, the state where Trump won clearly in 2016 and 2020. The US Dollar had a strong run-up in October as traders were pricing in Trump’s victory, given his preference for protectionist policies is expected to support the Greenback’s valuation.

Trump has vowed to levy a universal 10% tariff on all economies, except China – which is expected to face much higher duties – if he wins the presidential election. In addition to that, he also promised to lower corporate taxes, which would likely result in a high inflationary environment.

The US presidential election is the main event this week. However, investors will also focus on the Federal Reserve’s (Fed) monetary policy decision, 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 size of the cut will be smaller after policymakers voted for a 50 bps rate cut in September.

Daily digest market movers: Pound Sterling remains muted ahead of BoE meeting

• The Pound Sterling trades broadly unchanged against its major peers, with investors focusing on the Bank of England’s (BoE) policy meeting on Thursday. The BoE is expected to cut interest rates by 25 basis points (bps) to 4.75%. This would be the second interest rate cut of the year. Seven Monetary Policy Committee (MPC) members are expected to vote for further policy easing, while the remaining two will likely support keeping rates steady.
• BoE external member Catherine Mann is expected to be one of two members who would vote to keep interest rates at their current levels. In a panel discussion at the sidelines of International Monetary Fund (IMF) meetings on October 24, Mann – an outspoken hawk – welcomed the release of the soft inflation data but emphasized the need for more slowdown. “In order to get to a target consistent with a 2% inflation rate, services (inflation) still have a long way to go,” Mann said.
• When asked about her current interest rate stance, Mann said that rate cuts are premature at this stage.
• Apart from the interest rate decision, investors will look for any comment from the BoE about the impact of the UK Autumn Forecast Statement – unveiled by UK Chancellor of the Exchequer Rachel Reeves last week – on monetary policy and the inflation outlook. After the budget announcement, the Office for Business Responsibility (OBR) said that the announced fiscal measures are both pro-growth and inflationary.

Technical Analysis: Pound Sterling wobbles near 1.2950

The Pound Sterling trades sideways against the US Dollar near 1.2950. The GBP/USD pair consolidates inside Monday’s range ahead of the opening of the polls in the US. The near-term trend of the GBP/USD pair remains bearish as it stays below the 50-day EMA at 1.3060 but has found a cushion near the 200-day EMA around 1.2850.

The pair struggles to hold near the lower boundary of the rising channel formation on the daily time frame. A decisive break below this boundary could trigger further declines.

The 14-day Relative Strength Index (RSI) holds 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.

• EUR/JPY gains traction to around 165.75 in Tuesday’s early European session. 
• The lower bets of a larger ECB rate cut in December support the Euro. 
• Less dovish remarks from the BoJ, safe-haven flows are likely to cap the upside for the cross. 

The EUR/JPY cross attracts some buyers to near 165.75 during the early European session on Tuesday. The Euro (EUR) edges higher as the recent Eurozone economic data has diminished expectations for the European Central Bank (ECB) to cut larger interest rates in December.

The stronger-than-expected Eurozone Gross Domestic Product (GDP) data prompted traders to pare bets supporting a larger-than-usual interest rate cut in the December policy meeting. Money markets are currently pricing in a 34 basis points (bps) rate cut, down from a 42 bps reduction the previous day. 

The ECB Executive Board member Isabel Schnabel said last week that a “gradual” approach to monetary easing remains appropriate, while Bundesbank President Joachim Nagel said officials mustn’t rush further steps on rate cuts. Traders will take more cues from the Eurozone November inflation report, which might offer some hints about the pace and size of ECB interest rate reduction. 

The upside for the cross might be limited amid the uncertainty surrounding the US presidential election and the ongoing geopolitical tensions in the Middle East, which boost the safe-haven assets like the Japanese Yen (JPY). 

Additionally, less dovish remarks from BoJ Governor Kazuo Ueda could lift the JPY in the near term. BoJ’s Ueda said last week that Japan faces smaller risks from the US and global economies, hinting that the Japanese central bank is closer to an additional interest rate hike, possibly in the coming months.

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

Financial markets remain on edge as the US presidential election takes center stage, with latest polls pointing to a tight race. On Tuesday, the US economic calendar will feature Goods Trade Balance data for September and the ISM Services PMI report for October. Later in the day, the US Treasury will hold a 10-year note auction. 

The TIPP poll has Donald Trump and Kamala Harris tied at 48, the Ipsos poll has Harris leading by 2 points, 50 vs 48, and the Atlas Intel poll has Trump having a one point lead, 50 vs 49, as per RealClearPolling. In some swing states, such as Arizona and North Carolina, Trump seems to be staying on top, while Harris seems to have closed the gap in others, such as Nevada, Georgia and Pennsylvania. Experts think that it might take at least a few days before there is a clear winner. In the meantime, US stock index futures trade marginally higher in the European morning and the US Dollar Index fluctuates in a tight range slightly below 104.00 after closing deep in negative territory on Monday.

The Reserve Bank of Australia (RBA) announced on Tuesday that it left the policy rate unchanged at 4.35%, as expected. In its policy statement, the RBA reiterated that the policy will need to be sufficiently restrictive until the board is confident that inflation is moving sustainably towards the target range and added that they do not see inflation returning sustainably to the midpoint of the target until 2026. In the post-meeting press conference, RBA Governor Michele Bullock noted that they remain ready to act if the economy were to turn down more than expected. AUD/USD gained traction following the RBA event and was last seen trading in positive territory at around 0.6600.

During the Asian trading hours, the data from China showed the Caixin Services PMI improved to 52 in October from 50.3 in September. This reading came in better than the market expectation of 50.5.

EUR/USD climbed to its highest level in over two weeks above 1.0900 on Monday but erased its gains to close the day flat. Early Tuesday, the pair moves sideways near 1.0880.

GBP/USD met resistance near 1.3000 after opening the week with a bullish gap and went into a consolidation phase. At the time of press, the pair was fluctuating in a narrow channel slightly above 1.2950.

USD/JPY holds steady above 152.00 in the European morning on Tuesday after posting losses on Monday. 

Gold failed to make a decisive move in either direction and ended the day virtually unchanged on Monday. XAU/USD stays relatively quiet to begin the European session and remains below $2,750.

• EUR/USD trades in positive territory around 1.0880 in Tuesday’s early European session. 
• The negative outlook of the pair prevails below the 100-day EMA and bearish RSI indicator. 
• The immediate resistance level emerges at  1.0931; the first downside target is seen at 1.0800. 

The EUR/USD pair remains firmer near 1.0880 during the early European session on Tuesday. The uncertainty surrounding the US presidential election outcome weighs on the Greenback and provides some support to the pair. 

 “A Republican clean sweep can send the dollar higher, but probably by less than how much a Harris win could hit USD. The dollar might not rally at all if Trump wins but Democrats secure the (U.S. House of Representatives),” noted ING Bank analysts. 

Technically, the EUR/USD pair keeps the bearish vibe on the daily chart as the major pair holds below the key 100-day Exponential Moving Averages (EMA). Additionally, the downward momentum is supported by the Relative Strength Index (RSI), which stands below the midline near 47.25, suggesting that the path of least resistance is to the downside. 

The 1.0800 psychological level acts as an initial support level for EUR/USD. Further south, the next contention level is seen at the 1.0770-1.0760 region, representing the low of October 24 and the lower limit of the Bollinger Band. A breach of the mentioned level could expose 1.0666, the low of June 26.

On the bright side, the first upside barrier for the major pair emerges near 1.0931, the 100-day EMA. The additional upside filter to watch is 1.0951, the upper boundary of the Bollinger Band. The crucial resistance level is located at the 1.1000 round mark.  

EUR/USD daily chart

• USD/CHF remains steady due to market caution amid increased uncertainty surrounding the US election results.
• Improved US Treasury yields could have provided support for the US Dollar.
• The continued slowdown in Swiss inflation has increased the likelihood of a bumper SNB rate cut in December.

USD/CHF holds ground after registering losses in the previous session, trading around 0.8640 during the Asian hours on Tuesday. The US Dollar (USD) remains steady as traders adopt market caution amid increased uncertainty surrounding the US presidential election. Additionally, improved US Treasury yields also provide support for the Greenback.

The opinion polls indicate that former President Donald Trump and Vice President Kamala Harris are nearly tied. The outcome may remain unknown for several days following Tuesday’s vote. Both Trump and Harris expressed confidence in their chances as they campaigned across Pennsylvania on the last frantic day of this exceptionally close presidential race.

The US Dollar Index (DXY), which measures the value of US Dollar against its six major peers, trades around 103.90 with 2-year and 10-year yields on US Treasury bonds standing at 4.16% and 4.29%, respectively, at the time of writing.

The Swiss Franc (CHF) may encounter difficulties as the likelihood of significant rate cuts by the Swiss National Bank (SNB) increases. This shift is driven by a continued slowdown in inflation in Switzerland, evidenced by the Consumer Price Index (CPI), which declined by 0.6% year-over-year in October. This CPI figure was notably below the SNB’s inflation forecast of 1% for the fourth quarter, raising the chances that the SNB could implement a more substantial rate cut in December to keep inflation within its target range of 0-2%.

FX option expiries for Nov 5 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

EUR/USD: EUR amounts

• 1.0725 2.5b
• 1.0750 1.2b
• 1.0850 2b
• 1.0900 1.7b
• 1.0950 1.3b

GBP/USD: GBP amounts     

• 1.3000 710m
• 1.3115 988m

USD/JPY: USD amounts                     

• 151.00 440m
• 152.00 1.1b
• 152.50 510m

USD/CHF: USD amounts     

• 0.8750 896m

AUD/USD: AUD amounts

• 0.6530 412m
• 0.6600 715m

USD/CAD: USD amounts       

• 1.3905 587m

NZD/USD: NZD amounts

• 0.6000 410m

EUR/GBP: EUR amounts        

• 0.8425 410m
• 0.8430 408m

• Silver price maintains its position as traders adopt caution due to increased uncertainty surrounding the US election results.
• The opinion polls indicate that former President Trump and Vice President Harris are nearly tied.
• Silver demand may increase due to rising expectations for additional stimulus measures from China.

Silver price (XAG/USD) maintains its position around 32.50 during Asian trading hours on Tuesday as traders adopt caution ahead of the US presidential election. However, the heightened uncertainty surrounding the election has led to increased demand for safe-haven assets like Silver.

The risk aversion sentiment has been amplified by speculation that a potential presidency under Republican nominee Donald Trump could lead to higher inflation, given his pledge to significantly raise trade tariffs. This has prompted investors to seek safe-haven assets as a hedge against long-term inflation risks.

However, the opinion polls indicate that former President Donald Trump and Vice President Kamala Harris are nearly tied. The final outcome may remain unknown for several days following Tuesday’s vote. Both Trump and Harris expressed confidence in their chances as they campaigned across Pennsylvania on the last frantic day of this exceptionally close presidential race.

US Federal Reserve’s (Fed) policy decision will be eyed on Thursday. Markets expect a modest 25 basis point rate cut this week. The CME FedWatch Tool shows a 99.5% probability of a quarter-point rate cut by the Fed in November. This could provide support for Silver as lower interest rates reduce the opportunity cost of holding non-interest-bearing assets.

Expectations for additional stimulus measures from China could bolster Silver demand as the Standing Committee of the National People's Congress (NPC) holds a five-day meeting from November 4 to 8. Chinese authorities are anticipated to approve a potential stimulus package exceeding 10 trillion yuan to support the country's economy. Given China’s position as one of the world’s largest manufacturing hubs for electronics, solar panels, and automotive components, this could lead to increased demand for Silver.

• AUD/NZD rallies around 45 pips intraday following the release of the upbeat Chinese PMI print.
• The RBA’s on-hold rate decision and hawkish outlook do little to provide any meaningful impetus.
• Bets for more aggressive RBNZ interest rate cuts favor bulls ahead of NZ jobs data on Wednesday.

The AUD/NZD cross reverses an Asian session dip to the 1.0990 region and rallies to a one-week top on Tuesday in reaction to the upbeat Chinese data. Spot prices stick to modest intraday gains around the 1.1030 area and move little after the Reserve Bank of Australia (RBA) announced its policy decisions. 

Data published earlier this Tuesday showed that business activity in China's services sector expanded at the fastest pace in three months during October and the Caixin/S&P Global Services PMI rose from 50.3 in September to 52. This was consistent with the official PMIs released last week and could be seen as an early sign that China's big stimulus push is helping improve business conditions, which, in turn, provides a goodish lift to the Australian Dollar (AUD). 

The New Zealand Dollar (NZD), on the other hand, continues with its relative underperformance in the wake of rising bets for more aggressive interest rate cuts by the Reserve Bank of New Zealand (RBNZ). The expectations were reaffirmed by RBNZ's semi-annual Financial Stability Report, which indicated that the economic conditions remain challenging and also warned about the impact of geopolitical tensions on the economy.  

The report further stated that rising unemployment is starting to create acute financial difficulties for some households. Adding to this, RBNZ Governor Adrian Orr said that the real economy is lagging reduction in interest rates. Meanwhile, the RBA's widely anticipated decision to leave the cash rate unchanged at 4.35% and hawkish outlook did little to impress the AUD bulls or provide any meaningful impetus to the AUD/NZD cross. 

In the post-meeting press conference, RBA Governor Michele Bullock reiterated that there are still risks on the upside for inflation and that rates need to stay restrictive for the time being. This, in turn, suggests that the path of least resistance for the AUD/NZD cross remains to the upside. Investors now look forward to the release of the quarterly employment report on Wednesday, which could determine the near-term trajectory for the currency pair.

Gold prices fell in India on Tuesday, according to data compiled by FXStreet.

The price for Gold stood at 7,393.81 Indian Rupees (INR) per gram, down compared with the INR 7,403.41 it cost on Monday.

The price for Gold decreased to INR 86,243.14 per tola from INR 86,351.97 per tola a day earlier.

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.)

Reserve Bank of Australia (RBA) Governor Michele Bullock is speaking at the press conference, following the announcement of the November monetary policy decision on Tuesday.

Bullock is responding to questions from the media, as part of a new reporting format for the central bank starting this year.

The RBA maintained the benchmark interest rate at 4.35% for the eighth straight meeting earlier this Tuesday.

Key quotes

developing story ...

Market reaction

AUD/USD is holding gains near 0.6600 on the above comments, up 0.11% on the day, as of writing.

• Gold price slides to a one-week low amid some repositioning trades ahead of the US election.
• Fed rate cut bets, falling US bond yields and subdued USD demand could lend some support.
• Middle East tensions might further contribute to limiting losses for the safe-haven XAU/USD.

Gold price (XAU/USD) attracts fresh sellers during the Asian session on Tuesday and drops to over a one-week low, around the $2,725-2,724 region, though the downside seems cushioned. The uncertainty surrounding the closely contested US presidential election, along with the risk of a further escalation of geopolitical tensions in the Middle East, might continue to offer support to the safe-haven precious metal.

Meanwhile, the unwinding of the "Trump trade" and bets the Federal Reserve (Fed) will lower interest rates further amid signs of a cooling US labor market lead to a further decline in the US Treasury bond yields. This fails to assist the US Dollar (USD) to build on the overnight bounce from a two-week low and should further contribute to limiting any meaningful depreciating move for the non-yielding Gold price. 

Daily Digest Market Movers: Gold price might continue to draw support from US political jitters, Middle East woes

• The recent opinion polls indicated that Democratic candidate Kamala Harris and Republican Donald Trump are locked in a tight race to the White House, fueling political uncertainty.
• The winning odds of former President Donald Trump have fallen significantly, prompting some unwinding of the "Trump Trade" and dragging the US Treasury bond yields lower.
• The yield on the benchmark 10-year US government bond and the two-year Treasury note registered their biggest one-day decline in two months and nearly three weeks, respectively.
• A part of the decline in the US bond yields could further be attributed to rising bets for more interest rate cuts by the Federal Reserve, bolstered by signs of a weakening US labor market. 
• Iran signaled that it would deliver a harsh response to Israel's late-October strikes on its territory, while the US directly warned Iran against launching another attack against its ally Israel. 
• Tuesday's US economic docket features the release of the ISM Manufacturing PMI later during the US session, although it might do little to provide any impetus ahead of the US presidential election. 

Technical Outlook: Gold price could find some support near $2,750-2,715 area ahead of the lower end of an ascending channel

From a technical perspective, last week's failure near the top boundary of an ascending channel extending from late July and the subsequent pullback from the all-time peak could be seen as a sign of bullish exhaustion. However, mixed oscillators on the daily chart warrant some caution before positioning for further losses. Hence, any further decline is more likely to find some support near the $2,720-2,715 horizontal zone, below which the Gold price could aim to challenge the trend-channel support, currently pegged near the $2,690 region. Some follow-through selling would mark a bearish breakdown and pave the way for some meaningful corrective fall in the near term.

On the flip side, the $2,748-2,750 area now seems to act as an immediate hurdle ahead of the $2,790 region, or the record high touched last Thursday. This is followed by the $2,800 round figure and the ascending channel resistance, around the $2,820 zone. A sustained strength beyond the latter will be seen as a fresh trigger for bullish traders and allow the Gold price to prolong its recent well-established uptrend.

• AUD/JPY trades in positive territory in Tuesday’s Asian session, up 0.22% on the day. 
• The RBA decided to keep the OCR on hold at 4.35% at its November meeting on Tuesday. 
• The US presidential election uncertainty might cap the upside for the cross. 

The AUD/JPY cross gains traction to near 100.40 during the Asian trading hours on Tuesday. The Australian Dollar (AUD) edges higher after the Reserve Bank of Australia (RBA) interest rate decision. 

The RBA kept the Official Cash Rate (OCR) on hold at 4.35% following the conclusion of its November policy meeting. The decision came in line with market expectations. The Aussie remains firm following the RBA rate decision. 

According to the RBA Monetary Policy Statement, the board members will continue to rely upon the upcoming data and the evolving assessment of risks. The policymaker further stated that the monetary policy will need to be sufficiently restrictive until the central bank is confident that inflation is moving sustainably toward the target range. 

Traders will take more cues from the RBA’s updated economic forecasts and Governor Michele Bullock’s press conference, which might offer some insight into the interest rate outlook. 

On the other hand, the uncertainty surrounding the US presidential election could boost the safe-haven currency like the Japanese Yen (JPY) and cap the upside for the cross. Additionally, less dovish remarks from BoJ Governor Kazuo Ueda could underpin the JPY in the near term. "Many market players had bet that the next rate hike will come in the January-March quarter next year. But he sounded as if he left open the chance of a December hike," said Hiroshi Watanabe, senior economist at Sony Financial Group.

• USD/CAD remains steady as traders adopt caution due to increased uncertainty surrounding the US election results.
• Former President Trump indicated that he may challenge any unfavorable election result, as he did in 2020.
• The commodity-linked CAD may struggle due to cooling WTI price, despite a more than 3% increase on Monday.

The USD/CAD pair maintains its position around 1.3900 during Tuesday’s Asian session, as traders exercise caution amid heightened uncertainty over the US presidential election outcome. However, a lower-than-expected US Nonfarm Payrolls report for October, showing an increase of only 12,000 compared to the previous 223,000, has put downward pressure on the US Dollar (USD).

The opinion polls show that Former President Donald Trump and Vice President Kamala Harris are virtually even. The final winner may not be known for days after Tuesday’s vote. Trump and Harris both predicted victory as they campaigned across Pennsylvania on Monday in the final, frantic day of an exceptionally close US presidential election. Trump has already indicated he may challenge any unfavorable result, as he did in 2020.

Traders await the US Federal Reserve’s (Fed) policy decision, which is scheduled for Thursday. Markets expect a modest 25 basis point rate cut this week. The CME FedWatch Tool shows a 99.5% probability of a quarter-point rate cut by the Fed in November.

The downside of the USD/CAD pair could be restrained, as the commodity-linked Canadian Dollar (CAD) could face challenges from a cooling WTI price, despite a more than 3% increase on Monday after the OPEC+ coalition announced a delay in its December production hike. West Texas Intermediate (WTI) Oil price trades around $71.20 per barrel at the time of writing.

The Canadian Dollar may weaken as the Bank of Canada (BoC) is anticipated to implement additional rate cuts at its final monetary policy meeting of the year in December. BoC Governor Tiff Macklem has indicated the possibility of another 50 basis points (bps) rate reduction.

Last week, Governor Macklem told to Senate Committee “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.”

• The Indian Rupee extends the decline in Tuesday’s Asian session.
• Negative domestic markets and relentless foreign capital outflows weigh on the INR.
• Investors await the outcome of the US presidential election for fresh catalysts.

The Indian Rupee (INR) extends its downside on Tuesday after closing at a new all-time low in the previous session. The downtick movement of the local currency is pressured by continuous foreign outflows from the equity markets due to jitters amid institutional players ahead of the outcome of the US presidential election and the US Federal Reserve (Fed) interest rate decision on Thursday.

Nonetheless, the likely foreign exchange intervention from the Reserve Bank of India (RBI) by selling US Dollar (USD) could help limit the INR’s losses. Looking ahead, investors brace for the winner of the US presidential election, which may not be known for days after voting ends. On Thursday, the Fed monetary policy meeting will be closely watched.

Daily Digest Market Movers: Indian Rupee remains vulnerable amid US election-related uncertainty

• The HSBC final India Manufacturing Purchasing Managers Index (PMI) improved to 57.5 in October from an eight-month low of 56.5 in September and was above a preliminary estimate of 57.4.
• "India's headline manufacturing PMI picked up substantially in October as the economy's operating conditions continue to broadly improve," noted Pranjul Bhandari, chief India economist at HSBC.
• "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.
• According to the IMF, India is now estimated to overtake Japan as the world's fourth-biggest economy by FY2025. The IMF forecasts that India's GDP will rise to $4,340 billion next fiscal year.
• Financial markets are now pricing in nearly a 98% possibility of a quarter point reduction and a near 80% chance of a similar-sized move in December, according to CME's FedWatch tool.

Technical Analysis: USD/INR keeps the positive bias

The Indian Rupee softens on the day. According to the daily chart, the constructive outlook of the USD/INR pair remains unchanged as the pair is well-supported above the key 100-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) holds above the midline near 65.20, indicating that further upside looks favorable.

The upper boundary of the ascending trend channel of 84.25 acts as an immediate resistance level for USD/INR. A clear bullish candlestick above this level could pave the way to 84.50, en route to the 85.00 psychological level.

On the flip side, a breach of the lower limit of the trend channel near 84.05 could attract enough bearish pressure to 83.78, the 100-day EMA.

• Oil prices receive downward pressure as traders adopt caution ahead of US election results on Tuesday.
• WTI prices rose more than 3% after OPEC+ postponed its planned production increase for December on Monday.
• Oil demand may increase as China is expected to approve an additional stimulus package of more than 10 trillion yuan.

West Texas Intermediate (WTI) Oil price edges lower due to uncertainties surrounding the results of the US presidential election on Tuesday. The WTI price trades around $71.20 during the Asian hours after rising more than 3% on Monday, which could be attributed to OPEC+ coalition, delaying plans to hike production in December.

On Sunday, the OPEC+ alliance—which includes the Organization of the Petroleum Exporting Countries and its allies like Russia—agreed to extend its production cut of 2.2 million barrels per day (bpd) through December 2024, citing weak demand and rising supply outside the group.

Regarding the US presidential election, former President Donald Trump and Vice President Kamala Harris both predicted victory as they campaigned across Pennsylvania on Monday in the final, frantic day of an exceptionally close US presidential election.

The opinion polls show that Trump and Harris are virtually even. The final winner may not be known for days after Tuesday’s vote. Trump has already indicated he may challenge any unfavorable result, as he did in 2020.

The Standing Committee of the National People's Congress (NPC) is meeting in China from November 4 to 8 and is expected to approve additional stimulus measures to support the slowing economy. Media reports suggest that the potential stimulus package could exceed 10 trillion yuan. Any new measures could positively impact Oil prices, as China is the world’s largest Oil importer.

Oil prices may have struggled due to the fading likelihood of a significant rate cut by the Federal Reserve (Fed) in November. Lower borrowing costs could stimulate economic activity in the United States (US), the world’s largest Oil consumer, potentially boosting oil demand and prices. However, markets expect a modest 25 basis point rate cut this week. The CME FedWatch Tool shows a 99.5% probability of a quarter-point rate cut by the Fed in November.

China's Premier Li Qiang said at an Import Expo in Shanghai on Tuesday that he is “confident of meeting this year’s growth target.”

Additional comments

• The Japanese Yen weakens slightly on Tuesday, though the downside remains cushioned.
• The BoJ’s hawkish hints, along with a weaker risk tone, offer support the safe-haven JPY.
• The US election-related uncertainty and Fed rate cut bets keep the USD bulls on the defensive.

The Japanese Yen (JPY) ticks lower against its American counterpart during the Asian session on Tuesday and moves away from a one-week high touched the previous day. The downside for the JPY, however, seems limited as traders might refrain from placing aggressive directional bets amid the uncertainty surrounding the US presidential election. Moreover, bets for a potential interest rate hike at the next Bank of Japan (BoJ) policy meeting in December could also offer some support to the JPY. 

Meanwhile, the "Trump trade" unwinding, along with expectations that the Federal Reserve (Fed) will lower interest rates later this week, leads to a further decline in the US Treasury bond yields, resulting in the narrowing of the US-Japan rate differential. This keeps the US Dollar (USD) bulls on the defensive and should act as a tailwind for the JPY. Furthermore, a weaker risk tone could benefit the JPY and contribute to keeping a lid on any meaningful appreciating move for the USD/JPY pair. 

Daily Digest Market Movers: Japanese Yen could draw support from BoJ rate hike bets, declining US bond yields

• The USD/JPY pair regains some positive traction on Tuesday, though a combination of factors might cap the upside ahead of this week's key event risks – the US presidential election and the Federal Open Market Committee (FOMC) meeting. 
• Despite the political uncertainty in Japan, Bank of Japan Governor Kazuo Ueda said last week that the central bank remains committed to normalizing its monetary policy by gradually hiking interest rates if economic data align with forecasts.
• Friday's weaker US jobs report for October, which showed that Nonfarm Payrolls registered the smallest gain since December 2020, reaffirmed market bets for a 25 basis point interest rate cut by the Federal Reserve later this week. 
• The chances of Donald Trump winning the 2024 US presidential election have deteriorated noticeably and the Democratic Vice President Kamala Harris has a slight lead in some polls, though overall they show a tight race to the White House. 
• This prompts traders to unwind "Trump trades" and leads to a further decline in US Treasury bond yields, narrowing the US-Japan rate differential and offering some support to the Japanese Yen amid a generally weaker risk tone.
• Meanwhile, the "Trump trade" unwinding fails to assist the US Dollar to capitalize on the overnight bounce from a two-week low, warranting some caution for the USD/JPY bulls and positioning for any meaningful appreciating move. 

Technical Outlook: USD/JPY technical setup favors bulls, the overnight swing low around mid-151.00s holds the key

From a technical perspective, the 152.00 round figure now seems to protect the immediate downside ahead of the overnight swing low, around the 151.55-151.50 region. Some follow-through selling could drag the USD/JPY pair further below the 151.00 mark, toward testing the 100-day Simple Moving Average (SMA) resistance breakpoint, currently pegged near the 150.30 region. This is followed by the 150.00 psychological mark, which if broken decisively will set the stage for deeper losses. 

On the flip side, momentum beyond the overnight swing high, around the 152.55-152.60 area, could extend further toward the 153.00 mark. The subsequent move up has the potential to lift the USD/JPY pair to the 153.35-153.40 supply zone en route to the 153.85-153.90 region, or a three-month peak touched last week. A sustained strength beyond the latter will be seen as a fresh trigger for bullish traders. Given that oscillators on the daily chart are holding in the positive territory, spot prices might then climb to the next relevant hurdle near the 154.60-154.70 area before aiming to reclaim the 155.00 psychological mark. 

• The Australian Dollar gained ground ahead of the RBA’s policy decision on Tuesday.
• Australia's Judo Bank Services and Composite PMIs improved to 51.0 and 50.2, respectively, in October.
• The US Dollar faced challenges amid uncertainty surrounding the US presidential election.

The Australian Dollar (AUD) maintains its position after registering gains in the previous session following improved Purchasing Managers Index (PMI) data released on Tuesday. Traders await the Reserve Bank of Australia’s (RBA) interest rate decision scheduled to be released later in the day.

The final reading of Australia's Judo Bank Services 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 Composite PMI climbed to 50.2 in October versus 49.8 prior. Additionally, Caixin China Services PMI rose to 52.0 in October from 50.3 in September.

The Reserve Bank of Australia is anticipated to keep the Official Cash Rate (OCR) steady at 4.35%, marking an eighth consecutive pause in November. The central bank is expected to hold current rates following its policy meeting.

Traders will likely focus on the RBA’s updated economic forecasts and Governor Michele Bullock’s press conference for new insights on the potential timing of the bank’s first rate cut since its post-COVID tightening cycle.

Investors will closely monitor the outcome of the US presidential election. Former President Donald Trump and Vice President Kamala Harris both predicted victory as they campaigned across Pennsylvania on Monday in the final, frantic day of an exceptionally close US presidential election.

Daily Digest Market Movers: Australian Dollar receives support from improved PMI data

• The opinion polls show that Trump and Harris are virtually even. The final winner may not be known for days after Tuesday’s vote. Trump has already indicated he may challenge any unfavorable result, as he did in 2020.
• The US dollar (USD) struggled amid the election-related uncertainty, with strategists linking the currency’s weakness to a Des Moines Register/Mediacom poll showing Democratic nominee Kamala Harris leading Republican candidate Donald Trump 47% to 44% in Iowa.
• The US Federal Reserve’s (Fed) policy decision on Thursday will also be closely watched. Markets expect a modest 25 basis point rate cut this week. The CME FedWatch Tool shows a 99.5% probability of a quarter-point rate cut by the Fed in November.
• 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.
• 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.
• China’s Commerce Minister Wang Wentao met with Australia’s Trade Minister Don Farrell on Sunday. China expressed hopes that Australia will continue enhancing its business environment and ensure fair and equitable treatment for Chinese companies.
• 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.

Technical Analysis: Australian Dollar remains below 0.6600, nine-day EMA

AUD/USD trades near 0.6590 on Tuesday, with the daily chart hinting at a potential easing of the bearish trend as the pair tests the nine-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) remains below 50, indicating that the bearish outlook persists.

On the resistance side, AUD/USD faces the nine-day EMA at 0.6596, with further resistance at the 14-day EMA at 0.6618. A break above these levels could strengthen the pair, possibly aiming for a psychological level of 0.6700.

In terms of support, immediate support is around the three-month low at 0.6536. A drop below this level could drive the pair toward the key psychological support at 0.6500.

AUD/USD: Daily Chart

China's Services Purchasing Managers' Index (PMI) rose to 52.0 in October from 50.3 in September, the latest data published by Caixin showed on Tuesday.

The market consensus was 50.5 in the reported period.

AUD/USD reaction to China’s Services PMI

At the time of writing, the AUD/USD pair is holding the latest uptick to near 0.6600, up 0.11% on the day.

• NZD/USD edges lower to 0.5970 in Tuesday’s Asian session. 
• Markets are widely expecting the Fed to cut rates by 25 bps when it announces its policy decision on Thursday. 
• The RBNZ stated the economic conditions remain challenging and business is doing it tough. 

The NZD/USD pair weakens to near 0.5970 on Tuesday during the Asian trading hours. The modest recovery of the US Dollar (USD) and the remarks from the Reserve Bank of New Zealand (RBNZ) weigh on the pair. Investors brace for the outcome of the US presidential election, which might trigger the volatility in the financial markets. 

The decline in the Greenback is likely due to a poll released over the weekend that reduced the probability of Republican Donald Trump winning the elections. Analysts said a Harris win might benefit the riskier currencies like the New Zealand Dollar (NZD), while a Trump victory could support the USD due to expected protectionist policies and higher inflation.

On Thursday, the Federal Reserve will announce its latest policy decision, with markets widely anticipating that the US central bank will cut interest rates by a quarter percentage point. Financial markets are now pricing in nearly a 98% possibility of a quarter point reduction and a near 80% odds of a similar-sized move in December, according to CME's FedWatch tool. 

On the Kiwi front, the RBNZ noted on Tuesday that the economic conditions remain challenging and business is doing it tough, adding that geopolitical tensions are the key risk for the economy. The RBNZ began cutting the Official Cash Rate (OCR) in August and stepped up the pace last month when it lowered the OCR by 50 bps to 4.75%. Most economists expect another 50 bps reduction on November 27.

On Tuesday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1016, as compared to the previous day's fix of 7.1203 and 7.1019 Reuters estimates.

The Reserve Bank of New Zealand (RBNZ) stated on Tuesday that the economic conditions remain challenging and business is doing it tough. The New Zealand central bank also warns of the impact of geopolitical tensions on the economy.  

Key quotes

Market reaction

At the press time, the NZD/USD pair was down 0.06% on the day to trade at 0.5968. 

• GBP/USD flat lines around 1.2950 in Tuesday’s early Asian session. 
• The Greenback loses ground in response to improved polling for Democratic candidate Kamala Harris. 
• The Bank of England is expected to cut interest rates at its November meeting on Thursday. 

The GBP/USD pair trades flat near 1.2950 during the early Asian session on Tuesday. Traders will closely monitor the outcome of the US presidential election. On Thursday, the attention will shift to the Bank of England (BoE) and the US Federal Reserve (Fed) monetary policy decisions. 

Meanwhile, the US Dollar Index (DXY), which tracks the USD’s value against six major currencies, broke below the 104.00 support and reached fresh two-week lows near 103.60 in response to improved polling for Democratic candidate Kamala Harris. 

Strategists said the USD weakness was linked to a poll by the Des Moines Register and Mediacom that showed Harris with a 47-44% lead over Trump in Iowa. 

The Fed's rate decision will take center stage on Thursday, which is widely expected to cut rates by a standard 25 basis points (bps) at the November meeting, rather than repeat the large 50 bps easing of its last decision. Fed Funds futures are pricing in over 80% chance of a December cut, while the swaps market is pricing in close to 50% possibility. 

On the GBP’s front, economists polled by Reuters forecast a quarter-point reduction in the benchmark rate to 4.75% at its BoE’s rate decision on Thursday. However, the longer-term outlook is less clear, with BoE governor Andrew Bailey unlikely to raise hope of another rate cut before the end of the year.