CFD Markets News and Forecasts — 06-11-2024

• EUR/USD plummeted nearly 2% on Wednesday as markets bid up the US Dollar.
• Fiber saw one of its worst days in years as markets struggle to find a reason to buy the Euro.
• EU economic calendar remains tepid, leaving markets to focus on Fed rate cuts.

EUR/USD plummeted during the midweek market session, falling over 1.75% into the red and tumbling back below 1.0750 for the first time since July. Markets have broadly pivoted into the Greenback following clear results from this week’s US presidential election that sees former President Donald Trump as the frontrunner.

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.’

The US presidential election still isn’t over, and some key battlegrounds will take some time before a final call is made, but markets are confident that the outcome has been decided, with Republican candidate and former President Donald Trump set to win 276 electoral votes. With the Republicans also set to win back both the US Senate and Congress, investors are anticipating a pro-growth environment with more deregulation as well as additional or extended business tax cuts.

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 daily chart reveals a considerable setback, as the currency pair faced a sharp rejection around the 50-day EMA, currently at 1.0929, and has dropped below both the 50-day and 200-day EMAs. This technical pullback reflects a cautious outlook for the euro, particularly given recent challenges faced by the eurozone economy, including concerns over slowing growth and inflation. The strong bearish candlestick observed in the latest session suggests a swift return of market caution, as the euro failed to sustain momentum above critical moving averages.

Looking at momentum indicators, the MACD line is currently above the signal line, but recent weakness has caused the histogram bars to contract, reflecting a loss of upward momentum. The MACD's proximity to the zero line hints at the potential for a shift in sentiment; should the MACD cross into negative territory, it may signal a further downturn for EUR/USD. Investors appear wary, as current price action implies that upward moves are likely to face resistance amid prevailing market uncertainties, aligning with broader risk aversion.

In the event of further weakness, traders should keep an eye on the 1.0700 level, which marks a psychological support area and could be crucial in gauging future market sentiment. If EUR/USD holds above this support, it may encourage a period of consolidation as the market assesses broader economic data and policy signals. However, a break below could amplify selling pressure, potentially drawing the currency pair toward the year’s lows around 1.0600, especially if the eurozone’s macroeconomic picture remains subdued. Conversely, for a bullish scenario to re-emerge, the euro would need to reclaim the 1.0900 level with sustained buying interest.

EUR/USD daily chart 

Reserve Bank of Australia Governor Michele Bullock said on Thursday that it’s premature to assess the impact of the US presidential election outcome and tariff implications. 

Key quotes

Market reaction

At the time of writing, AUD/USD is trading 0.02% lower on the day at 0.6570.

• USD/CAD gains momentum to around 1.3940 in Thursday’s early Asian session. 
• The victory of Republican candidate Donald Trump in the US presidential election lifts the Greenback.
• BoC officials worried that the jumbo rate cut would be a sign of economic trouble. 

The USD/CAD pair extends the rally to near 1.3940 during the early Asian session on Thursday. The uptick of the pair is bolstered by the strengthening of the US Dollar (USD) broadly after Republican candidate Donald Trump won the US presidential election. All eyes will be on the US Federal Reserve (Fed) interest rate decision on Thursday. 

The Greenback edges higher as investors bet that lower taxes and raising tariffs will push up inflation and reduce the pace of interest rate cuts as Trump was elected US president. Later on Thursday, attention will shift to the Fed monetary policy meeting. The US central bank is widely anticipated to cut the benchmark interest rate by 25 basis points (bps) at its meeting ending on Thursday. However, traders have begun to trim bets for a reduction in December and the number of rate cuts expected next year, according to CME's FedWatch tool.  

On the Loonie front, the Bank of Canada (BoC) decided to cut its benchmark interest rate by 50 bps at its October meeting, bringing the policy rate down to 3.75%. A summary of the BoC deliberations showed worry among some officials that an oversized step of a rate cut would spark fears that a steeper economic contraction may be coming. However, the BoC officials stated the markets should not necessarily expect half-point cuts at every meeting going forward as future decisions would be guided by incoming data.

• GBP/USD fell back below the 1.2900 level as markets pivot into the Greenback.
• Looming BoE rate cut provides little support for Cable.
• Fed due to deliver another rate cut in lockstep with BoE.

GBP/USD tumbled back below the 1.2900 handle on Wednesday as markets splurged on Greenback bids following the one-sided outcome of the US presidential election. The Bank of England (BoE) and the Federal Reserve (Fed) are both due to deliver matching quarter-point rate cuts on Thursday.

The US presidential election still isn’t over, and some key battlegrounds will take some time before a final call is made. Still, markets are confident that the outcome has been decided, with Republican candidate and former President Donald Trump set to win 276 electoral votes. With the Republicans also set to win back both the US Senate and Congress, investors are anticipating a pro-growth environment with more deregulation as well as additional or extended business tax cuts. 

Despite a steady stream of inflationary rhetoric from former President Donald Trump on the campaign trail, investors are viewing a Trump win as a net positive for markets, piling into risk assets as well as the Greenback during the midweek market session.

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 daily chart reveals a bearish sentiment as the currency pair tests support around the 200-day EMA, which is currently situated at 1.2858. After an attempt to break above the 50-day EMA (currently at 1.3038), GBP/USD faced a sharp rejection, indicating selling pressure at higher levels. The strong red candle on the latest trading day suggests that the bulls struggled to sustain momentum above 1.3000, leading to a decisive pullback. This price action underscores the significance of the 1.2850-1.2900 zone as a key support area, as a break below it could signal further downside.

Additionally, the MACD indicator at the bottom of the chart is displaying a bearish crossover, as the MACD line has dipped below the signal line. The histogram bars have turned red, reinforcing the downward momentum. Although the MACD is still close to the zero line, suggesting a potentially limited downside, the negative sentiment persists. If the MACD momentum accelerates further into negative territory, it would strengthen the bearish outlook for the GBP/USD pair, likely pushing prices toward lower support levels around 1.2700.

In the event of a bounce from the 200-day EMA, the bulls would need to reclaim the 50-day EMA at 1.3038 to shift the short-term bias back to bullish. A close above this level could invite further buying interest, potentially targeting the recent high around 1.3300. However, with the recent bearish crossover in the MACD and price action failing to sustain above 1.3000, the path of least resistance appears to be downward. Traders should monitor the 1.2850 level closely, as a decisive break below could accelerate selling pressure, with the pair likely targeting the 1.2700 handle in the coming sessions.

GBP/USD daily chart

• Silver breaks below key support levels, including 50-day SMA at $31.27.
• Daily close below $31.00 may lead to further decline toward 100-day SMA at $30.23.
• Resistance levels to watch: July 11 high at $31.75 and May 20 peak at $32.51.

Silver price slumped sharply on Wednesday after US President Donald Trump wins the 2024 presidential election. Additionally, the Republican party sweep seems likely as they hold the majority in the Senate, while the House of Representatives is still early to be called. The XAGU/USD trades at $31.16, down over 4.50%.

XAG/USD Price Forecast: Technical outlook

Silver's price uptrend remains in play, even though Trump’s victory boosted the Greenback. Consequently, the XAG/USD tumbled below key support levels, including the 50-day Simple Moving Average (SMA) at $31.27, which opened the door to hit a daily low of $30.84.

If XAG/USD achieves a daily close below $31.00, it could trigger a potential slump to the 100-day SMA at $30.23. If surpassed, the next stop would be the $30.00 figure.

On the upside, the next key resistance would be the July 11 high at $31.75. A breach of the latter will expose $32.00, followed by May’s 20 peak at $32.51.

XAG/USD Price Chart – Daily

• NZD/JPY continues to trade withing a range despite Wednesday's sharp gains.
• Indicators show that buying pressure spiked.
• The pair jumped above the 20 and 100-day SMA convergence.

In Wednesday's session, the NZD/JPY underwent upward fluctuations, gaining 0.96% to reach 91.80 and regaining key levels.

Regarding technical indicators, the Relative Strength Index (RSI) stands at 58, indicating a positive market sentiment with growing buying pressure. Moreover, the Moving Average Convergence Divergence (MACD) histogram displays decreasing red bars, suggesting a decline in selling pressure. These indicators collectively paint an improving technical picture For the NZD/JPY.

The NZD/JPY pair has rallied significantly, driven by buyers pushing the price action higher above the convergence of the 20 and 100-day Simple Moving Averages (SMAs). This move suggests a bullish momentum, as the SMAs are key technical indicators that gauge the average price movement over specific periods. The buyers must now maintain this level above the SMA convergence to sustain the bullish trend. If they succeed, it could lead to further upside potential.

NZD/JPY daily chart

• The Canadian Dollar shed ground as markets pile back into the US Dollar.
• Canada saw a disappointing print in Ivey PMI figures.
• Investors will now pivot to Thursday’s Fed rate call.

The Canadian Dollar (CAD) snapped a recovery against the Greenback on Wednesday, slipping back into familiar multi-year low territory after markets piled back into the USD following the US presidential election, where presidential candidate Donald Trump is the clear frontrunner. With the US election behind markets, investors are now turning on their heels to face the Federal Reserve’s (Fed) upcoming rate call on Thursday.

Canada saw another dip in its Ivey Purchasing Manager Index (PMI) activity survey results, underpinning the Bank of Canada’s (BoC) ongoing grapple with a lopsided economic landscape. Despite a series of increasing rate cuts from the Canadian central bank, growth and business activity expectations continue to sink.

Daily digest market movers

• The US is set to elect Donald Trump to a second term as President, sparking a broad risk-appetite rally throughout global markets but sending markets piling into the Greenback as well.
• The Fed is widely expected to trim interest rates by a further 25 bps on Thursday.
• Canada saw its seasonally-adjusted Ivey PMI sink to 52.0 in October, down from the previous 53.1 and missing the expected uptick to 54.2.
• A recovery in Canadian PMI figures has stalled out as economic activity figures continue to soften.
• Canadian labor figures are slated for Friday, with Net Change in Employment in October expected to ease lower to 25K from the previous 46.7K.

Canadian Dollar price forecast

The Canadian Dollar (CAD) is back to grappling with lows against the Greenback initially set in late 2022, sending the USD/CAD pair back into the 1.3950 region. A near-term recovery for the Loonie is set to end once again, with USD/CAD on pace to find green territory for a sixth consecutive week.

Despite a flubbed recovery for the Loonie, USD/CAD is knocking against the ceiling of a long-run technical congestion zone. Short pressure may be collecting just below the 1.4000 handle and could keep the pair hobbled and set for a return to the downside.

USD/CAD daily chart

• NZD/USD drops to fresh lows, technical bias bearish
• RSI below 35, MACD histogram rising red, indicating selling pressure
• Pair fell back to lows since August.

On Wednesday, the NZD/USD pair declined sharply by 1% to 0.5945, reflecting the strengthening US dollar across the board. This weakness suggests a shift in sentiment, as the New Zealand dollar has been unable to regain the key 20-day Simple Moving Average (SMA) and fell back to lows since August.

The technical outlook for NZD/USD remains bearish, as indicated by the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators. The RSI has remains deep in negative territory, reaching 35, and is declining sharply, suggesting that selling pressure is rising. The histogram of the MACD is red and rising, another sign of increasing selling pressure.

A break below 0.5950 could open the door to a test of 0.5900 and even 0.5850. On the other hand, a breakout above 0.6000 could pave the way for a move towards 0.6050 and 0.6100.

NZD/USD daily chart

• Gold price tanks as US yields rise and underpin the Greenback.
• Trump’s decisive win lifts US yields and US Dollar to four-month high, pressuring Gold.
• Fed’s expected rate cut on Thursday, which could halt Bullion's losses.

Gold plunged to a three-week low below $2700 a troy ounce on Wednesday after the 2024 US Presidential election. The Republican candidate, former President Donald Trump, won the contest, bolstering the Greenback and US Treasury bond yields. Therefore, the XAU/USD posted losses of over 2.50% and traded at $2,667 at the time of writing.

Traders’ uncertainty has finally subsided, as Trump’s victory was not as close as expected. Besides this, the Republican party completed the red sweep, achieving the majority in the Senate and controlling the House of Representatives.

Therefore, the Trump trade extended as market participants lifted US equities to record highs, the Greenback soared to a four-month peak, and the US Treasury yield skyrocketed.

Investors continued to digest the US economic outlook. Trump’s economic policy suggests imposing tariffs, a wider fiscal deficit, and fewer taxes. His economic proposals are at odds with the Fed's fight against inflation. Therefore, the US central bank would be forced to adopt a gradual approach when easing monetary policy.

In the meantime, the US Dollar Index (DXY), which tracks the buck’s performance against six peers, is up at 105.04 and gains 1.54%. Yields, particularly the 10-year benchmark note coupon, surged 16 basis points to 4.437%.

Bullion prices are also down as traders clarify who will occupy the White House for the next four years, beginning in January 2025. Rhona 0' Connell, Stone X analyst, said, “A clear presidential victory when the market has been pricing in a contested result, removal of an element of risk, Trump trades include the dollar's strengthening this morning, and the combination of the two has brought gold lower.”

The US economic schedule will feature Thursday's Federal Reserve (Fed) monetary policy decision. The central bank is expected to lower borrowing costs by 25 basis points to the 4.50%-4.75% range.

Daily Digest Market Movers: Gold price slumps also on heightened US Real yields

• Gold prices retreated sharply in addition to elevated US real yields, which inversely correlate against Bullion. Real yields are up 15 basis points to 2.156%, hit its highest level since July 2024.
• On Tuesday, the US economic schedule 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.
• 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 tumbles with sellers eyeing $2,650

Gold price retreated below $2,700 and cleared the September 26 daily high, turning support at $2,685. This triggered a move toward the $2,650 region, which, if broken, would expose the 50-day Simple Moving Average (SMA) at $2,635. A break to the downside might expose $2,600.

On the other hand, if buyers lift XAU/USD past $2,700, the golden metal might consolidate around that area. But if they clear the October 23 high at $2,758, Gold could test the record high of $2,790 in the near term.

Momentum favors sellers, although the uptrend remains intact. The Relative Strength Index (RSI) turned bearish after falling steeper below its neutral line.

• AUD/USD falls after Donald Trump wins the US presidential election.
• Republican victory raises concerns about trade war with China, weighing on AUD.
• RBA's hawkish stance might limit the AUD losses

The AUD/USD pair plunged 1.25% to 0.6555 on Wednesday after Donald Trump's US presidential election victory sparked enthusiasm for the US Dollar. Fears of a trade war with China, fueled by the Republican victory, weighed on the Australian Dollar.

However, the Reserve Bank of Australia's (RBA) hawkish stance might limit the AUD losses as this week Governor Michelle Bullock highlighted the need to maintain rates at restrictive levels to control inflation.

Daily digest market movers: Australian Dollar declines on Trump’s victory

• AUD/USD plunged over 130 pips due to increased USD demand driven by Trump's election victory projections.
• US Dollar Index (DXY) surged to a four-month high after exit polls indicated Republican dominance.
• Republicans are poised to control the House and Senate, raising concerns over tariffs and trade wars with China.
• Deficit spending fears and reduced rate cut expectations boosted US Treasury yields, supporting the USD.
• That being said, RBA's hawkish stance, emphasizing the need for restrictive interest rates, might support the AUD.
• RBA Governor Bullock highlighted the importance of maintaining high interest rates to combat inflationary pressures.
• Signs of China's economic recovery limited losses for the Aussie, leading to intraday short-covering.

AUD/USD technical outlook: Pair rides on bearish momentum, recovery halted

The Relative Strength Index (RSI) is in the negative area and declining sharply, suggesting that selling pressure is rising. The Moving Average Convergence Divergence (MACD) is also bearish, with the histogram flat and red. Overall, the technical outlook is bearish, and the pair could potentially test the 0.6450 support level if the bearish momentum continues.

The AUD/USD pair's inability to break above the convergence of the 200 and 20-day Simple Moving Averages (SMAs) at approximately 0.6630 signaled a bearish reversal. This rejection suggests that the upward momentum seen in recent weeks has been exhausted, and the pair is poised for further declines.

The Greenback was set for its biggest one-day gain since 2020, boosted by Trump’s victory and the rising chances of a “Red Sweep.” Up next is the Fed meeting, where a 25-basis-point rate cut is widely expected by investors. Following Trump’s win, the market will closely examine the Fed’s stance on any additional rate cuts.

Here is what you need to know on Thursday, November 7:

The US Dollar Index (DXY) rose to four-month tops north of the 105.00 hurdle on the back of Trump’s win and higher US yields. The Fed’s interest rate decision will be at the centre of the debate, seconded by weekly Initial Jobless Claims and Wholesale Inventories.

EUR/USD made a sharp U-turn and plummeted to the 1.0680 region in response to the robust performance of the Greenback. Germany’s Balance of Trade results and Industrial Production are due, along with the HCOB Construction PMI in Germany and the euro area, as well as Retail Sales in the bloc. In addition, the ECB’s Elderson, Buch, Lane, and Schnabel are all due to speak.

GBP/USD followed its risk peers and broke below the 1.2900 support following the strong resurgence of the bid bias in the US Dollar. The release of the Halifax House Prices Index will precede the BoE’s interest rate decision and the speech by Governor Bailey.

USD/JPY advanced to levels last seen in late July past the 154.00 barrier on the back of the intense bid bias in the Greenback after Trump wan the US election. Average Cash Earnings, and weekly Foreign Bond Investment figures are due.

AUD/USD plummeted to the vicinity of the 0.6500 support, where some contention appears to have turned up so far. Australia’s Balance of Trade, Private House Approvals, and Building Permits are all expected Down Under.

Prices of WTI managed to regain some balance following the early breakdown of the key $70.00 mark per barrel amidst a stronger dollar and the weekly build of US crude oil inventories, as per the EIA’s report.

Prices of Gold retreated to three-week lows near $2,650 per ounce troy in response to the firmer dollar and higher US yields across the board. By the same token, Silver Prices sold off sharply to three-week lows in the sub-$31.00 region.

• Trump victory raises expectation of policy-induced inflation, forcing Fed to keep policy restrictive for longer.
• FOMC meets on Thursday with a 25 bps cut priced in.
• US economy continues to grow at or above trend.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, surged to a four-month high after former US President Donald Trump secured the necessary electoral votes to become the next US president. 

The US Dollar Index trades above 105.00 on Wednesday, the highest level since early July, following a steep rise against most major peers. Trump's victory has fueled expectations of his policies, including tax cuts, deficit spending and tariffs, which are anticipated to spur inflation and constrain the Federal Reserve (Fed) from implementing a more dovish monetary policy.

Daily digest market movers: US Dollar rising on Trumps victory

• Markets had anticipated the victory as the US Dollar, UST yields, and US equity futures rose throughout the night, supported by the so-called “Trump Trade”. 
• This implies more inflation under a Trump presidency than otherwise, forcing the Fed to keep policy restrictive for longer.
• Historically, the US Dollar has benefitted the most under a Republican president, a Republican Senate, and a Democratic House.
• The two-day FOMC meeting begins on Wednesday and should end with the expected 25 bps cut.
• Despite a distorted jobs data, the US economy is growing robustly and the labor market remains in solid shape.
• October ISM services PMI was stellar, reflecting robust consumption as we move into Q4.

DXY technical outlook:  DXY breaks out to highest level since July

The DXY index witnessed a surge to multi-month highs, driven by bullish technical indicators. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) approach overbought territory, signaling a potential short-term correction. Wednesday's significant price action suggests consolidation before further upward momentum

Key support levels lie at 104.50, 104.30 and 104.00, while resistance faces at 105.50 and 106.00.

• Mexican Peso recovers but remains volatile; USD/MXN surged to yearly high of 20.80 before retreating.
• Trump’s tariff threats keep Mexican markets on edge; judicial reform ruling threatens the state of law.
• Fed's anticipated rate cut may further influence USD/MXN direction in the coming days.

The Mexican Peso recovers some ground against the Greenback after hitting a two-year low. Yet it treads water as investors digest former President Donald Trump’s victory in the US election. At the time of writing, the USD/MXN trades at 20.10, 0.12% above its opening price.

Mexico’s economic docket remained absent, though the day's highlight was the Supreme Court's discussion of Judge Juan Luis González Alcántara Carranca's proposal to invalidate some parts of the judicial reform bill approved by the ruling party, Morena, at the Congress.

The Supreme Court discussed the Gonzalez project and needed at least eight votes for its approval. Nevertheless, seven magistrates voted in favor, and four voted against it. This means the judicial reform approved in September remains in force, and the first election of judges and magistrates will be in June 2025.

Aside from this, the US presidential election overshadowed most news around the financial markets. The Republican candidate, former President Donald Trump, won the 2024 election with at least 277 Electoral College votes and led the red sweep, with the Republicans obtaining the majority in the Senate and possibly in the House of Representatives.

The USD/MXN remained volatile during the session, which began with the exotic pair rallying to new yearly highs of 20.80 before retreating somewhat to current exchange rates. Trump’s harsh rhetoric against Mexico keeps Peso holders nervous. He stated that he would impose 25% tariffs on all imports from Mexico if the government failed to dismantle drug cartels.

The US economic docket remains empty during the day. The Federal Reserve (Fed) began its two-day meeting that would end on Thursday. The Fed is expected to lower rates by 25 basis points (bps) to the 4.50%-4.75% range. After that Fed Chair Jerome Powell would host his usual press conference.

Daily digest market movers: Mexican Peso falls following US election results

• 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 21st straight month to 3.85% from 3.91%.
• On Tuesday, the US economic schedule 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.
• 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 remains on the defensive despite trimming earlier losses

The USD/MXN uptrend remains in play despite the pair trimming some of its earlier gains. However, buyers need to reclaim the 20.50 psychological figure if they would like to re-test two-year highs of 20.80. In that outcome, and once that resistance level is cleared, the next stop would be 21.00. A breach of the latter will expose 22.00, followed by the November 26 swing high of 22.15.

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.

• The Dow Jones reached a new record high after Trump looks set to beat Harris into the White House.
• A decisive election result is tipping stocks into a frenzy on hopes for deregulation.
• The Dow Jones is up 3.6% for the week with banking stocks charging to the top.

The Dow Jones Industrial Average (DJIA) surged to a fresh record on Wednesday, climbing into 43,600 after US presidential candidate looks set to sweep a victory away from Democratic nominee and current Vice President Kamala Harris. Equities are surging on expectations of stock-friendly moves from future President Donald Trump, specifically hopes for further deregulation in the banking sector.

The US presidential election still isn’t over, and some key battlegrounds will take some time before a final call is made, but markets are confident that the outcome has been decided, with Republican candidate and former President Donald Trump set to win 276 electoral votes. With the Republicans also set to win back both the US Senate and Congress, investors are anticipating a pro-growth environment with more deregulation as well as additional or extended business tax cuts.

Dow Jones news

About two-thirds of the Dow Jones board is tilted into the green on Wednesday. Companies burdened with physical inventories and logistics like Home Depot (HD) and Nike (NKE) were left out of the post-election spluge, with Home Depot falling nearly 4% to $385 per share and Nike backsliding 3.5% to $75 per share.

On the top end, Goldman Sachs (GS) and JPMorgan Chase (JPM) both hit the upper atmosphere, climbing over 12% and 10%, respectively. Goldman Sachs is knocking on $595 per share, with JPMorgan Chase stretching past $245 per share. 

Dow Jones price forecast

A firm bullish tilt to the Dow Jones daily candlesticks leaves short sellers with lots of potential but few opportunities. The DJIA has stretched firmly into fresh record territory north of 43,600, but a lack of meaningful technical signs for a turnaround leaves timing a short entry a hazardous process.

A downside snap as equity traders cool their jets after the election results could easily send price action back to the 50-day Exponential Moving Average (EMA) near 41,970. However, short pressure will first need to drag bids back to planet earth near 43,200.

Dow Jones daily chart

• Technical indicators send signals of the bulls weakening, with the RSI in oversold territory and the MACD showing decreasing green bars.
• The 20-day SMA support is now gone.

Wednesday’s EUR/GBP market has been dominated by significant losses, extending a bearish trend that has lasted the past seven trading sessions. This downward momentum has pushed the pair below its 20-day Simple Moving Average (SMA) and down to its lowest point in over a week.

Technical indicators are presenting a nuanced outlook. The Relative Strength Index (RSI), which measures the strength or weakness of price movements, has dipped into negative territory and its downward trajectory indicates a rise in selling pressure. The RSI's current value of 45 places it in the negative zone. The Moving Average Convergence Divergence (MACD), a trend-following indicator, displays decreasing green histogram bars. This suggests that buying pressure is waning.

The EUR/GBP cross plunged and lost the 20-day Simple Moving Average (SMA), indicating a potential downward trend. This decline pushed the cross to its lowest point in over a week, further suggesting a bearish sentiment. Supports now line up at 0.8330, 0.8315 and 0.8300.

EUR/GBP daily chart

• GBP/USD breaches key 1.2850 level; eyes 200-day SMA support at 1.2811.
• Close below 200-day SMA may lead to further losses, with next support at 1.2664.
• RSI momentum points to bearish control as election fallout pressures Pound.

The Pound Sterling plunged over 1.20% against the US Dollar on Wednesday after former US President Donald Trump won the 2024 Presidential election. Fears of tariffs and protectionist policies weighed on Cable, which is having its worst daily loss since October 3. At the time of writing, GBP/USD trades at 1.2881 after reaching a daily high of 1.3047.

GBP/USD Price Forecast: Technical outlook

The GBP/USD finally broke below the 1.2850 area and hit a daily low of 1.2833 but still fell shy of testing the 200-day Simple Moving Average (SMA) of 1.2811. If the pair achieves a daily close below the 200-day SMA, this will cement its bearish bias, opening the door to test 1.2800. GBP/USD would extend its losses once cleared, and the next support would be seen at 1.2664, the August 8 swing low, followed by the 1.2600 mark.

For a bullish scenario, the GBP/USD must surpass the 1.2900 figure and the 100-day SMA at 1.2985.

Momentum, as measured by the Relative Strength Index (RSI), indicated further downside. The RSI made a U-turn, falling steeper, an indication that sellers are in charge.

GBP/USD Price Chart – Daily

TDS expects the MPC to cut Bank Rate by 25bps with a 7-2 majority, and leave guidance relatively unchanged, implying a cautious approach to further cuts. The MPC's treatment of the recent budget will have important consequences for the market's interpretation of future policy moves. A BoE cut is well priced in and is unlikely to be a big driver of the GBP. Markets are likely to keep digesting the results of US elections, TDS’ analysts note.

Three scenarios to consider

“Hawkish (20%, +10bp, +15bp, +0.40%). The MPC takes the OBR's estimates of the budget impact at face value, and boosts inflation and growth more than we expect. It cuts rates, leaves guidance unchanged, but the size of the upgrades to growth and inflation over the forecast horizon suggest a slower pace of rate cuts.”

“Base Case (70%, -6bp, -8bp, -0.10%). The MPC cuts rates in a 7-2 vote and maintains its cautious guidance that cuts are likely to continue, but without any clear signal for timing, leaving a December pause firmly on the table. Projections incorporate less inflation-worrying impact from the recent budget, with softer inflation in Year 1, and broadly unchanged projections elsewhere. Year 2 and Year 3 inflation remain below the 2% target.”

“Dovish (10%, -10bp, -15bp, -0.50%). The MPC cuts rates in a more definitive 8-1 or 9-0 vote, and points to the rapid recent decline in inflation as a reason to be prepared for more cuts ahead. While there's no explicit signal of a December cut, the tone opens the door wide open to a cut then, and at subsequent meetings.”

• EUR/JPY pulls back to the trendline for the recent rally from the September lows. 
• If it breaks higher it could kick-off an extension to a target in the 169s, MACD is bearish, however.

EUR/JPY continues its pullback to the trendline (dashed line on chart) for the September-October rally. 

The pair is in a short and medium-term uptrend which given the technical analysis maxim that “the trend is your friend” is favored to continue higher. 

EUR/JPY Daily Chart 

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

Resistance at 167.96 (July 30 swing high) could provide an initial target and act as a barrier to further upside. 

The minimum target for the breakout from the range, however, lies higher, at 169.68, the 61.8% Fibonacci extrapolation of the height of the range to the upside (orange-shaded rectangle). 

The Moving Average Convergence Divergence (MACD) is threatening to cross below its signal line, however – a mildly bearish sign which could indicate further near-term weakness for the pair. 

There is also an open gap just below price which is only visible on the intraday charts at 164.90. Gaps have a habit of getting filled. If so, further weakness may be on the horizon, with price falling to the bottom of the open gap at 164.45. 

• Silver price plunges below $31.00 as Trump’s victory dampens its safe-haven appeal.
• Higher US Treasury yields and the US Dollar have weighed on the Silver price.
• Investors will focus on the Fed’s commentary to get cues about the impact of Trump’s victory on the interest rate path.

Silver price (XAG/USD) faces a bloodbath on a landslide victory of Republican candidate Donald Trump, is down almost 5% and falls below $31.00 in Wednesday’s North American session. The white metal weakens as investors expect that Trump would effort for a truce between Russia and Ukraine. A ceasefire of more than two Russia-Ukraine wars will improve global market sentiment.

Bloodshed between Russia and Ukraine was one of the reasons behind Silver’s rally, from a low of $18.00 to a more than decade high of around $35.00 in the past two years. Historically, the scenario of geopolitical tensions bodes well for precious metals, such as Silver, as it improves its safe-haven appeal.

Meanwhile, a sheer strength in the US Dollar (USD) and bond yields has also weighed on the Silver. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, posts a fresh four-month high of 105.30. 10-year US Treasury yields soar to near 4.45%. Higher yields on interest-bearing assets increase the opportunity cost of holding an investment in non-yielding assets, such as Silver.

Going forward, investors will focus on the Federal Reserve’s (Fed) interest rate decision, which will be announced on Thursday. The Fed is widely anticipated to cut interest rates by 25 basis points (bps) to 4.50%-4.75%, according to the CME FedWatch tool. Investors will focus on the Fed’s comments on the impact of Trump’s victory on the inflation outlook and the interest rate guidance.

Trump vowed to lower corporate taxes and hike import tariffs by 10% universally, except China which is expected to face tariffs even higher.

Silver technical analysis

Silver price extends its downside below $31.00 after sliding below the horizontal support plotted from the May 21 high of $32.50. The near-term trend of the Silver price has turned bearish as it has dropped below the 50-day Exponential Moving Average (EMA), which trades around $31.60.

The asset could find support near the upward-sloping trendline around $29.00, plotted from the February 28 low of $22.30.

The 14-day Relative Strength Index (RSI) dives to near 40.00. Should RSI (14) fall below 40.00, a bearish momentum will be triggered.

Silver daily chart

• GBP/CAD falls to the lower boundary of a bearish price pattern. 
• A clean break lower could indicate the start of a new downtrending cycle. 

GBP/CAD falls to the lower boundary line of a Rising Wedge pattern and the level of the (red) 50-day Simple Moving Average (SMA) at about 1.7826. Rising Wedges are usually bearish patterns, however, there is no way of confirming this is such a pattern, although it looks very much like one.

GBP/CAD Daily Chart 

A decisive break below the lower boundary line could see a decline to about the level of the 200-day SMA at around 1.7487. Further bearishness could lead to a move down to a target at 1.7364.

A break below the red dashed line on the chart at the key 1.7719 October 3 swing low would provide more cast-iron confirmation of a breakout and reversal in the medium-term uptrend. 

GBP/CAD broke temporarily above the upper guardrail of the Rising Wedge pattern on several occasions (blue circles on chart) on September 20 and November 1. This could be a sign of bullish exhaustion and an early warning of impending reversal. 

The Moving Average Convergence Divergence (MACD) momentum indicator has been flat recently but looks poised to break lower – a mildly bearish sign on the chart.

Former President Donald Trump is on his way to the White House again with remaining votes in Pennsylvania not enough to lead to Harris taking a state that is looking essential for a road to the White House for the Democrats. With Pennsylvania lost Associated Press has just called the election for Trump, MUFG’s FX analysts note.

Trump wins with FX reaction as expected so far

“EUR/USD is now 1.9% lower and we see scope for this drop to extend further lower from here. If anything this election result is looking closer to a landslide relative to how close this election was anticipated to be. The figures look to be showing Trump winning over 300 electoral college votes that will be a huge endorsement of the policies he has been campaigning on. Trump won 304 electoral college votes in 2016 but a key difference in 2024 is that Trump is on track to win the popular vote which will reinforce Trump’s determination to implement the policies he campaigned on.”

“We are reportedly going to hear from Tump soon which may come prior to an official call on his victory but that won’t matter on this occasion. Harris has indicated she will not speak to the nation until tomorrow when she will of course be conceding defeat. We indicated in our FX Outlook in October and November that a Trump victory would lead to a potential 7-8% stronger US dollar relative to the forecasts if Harris won. That implied EUR/USD dropping below the 1.0500-level (to around 1.0300-1.0400) by the end of this year.”

“We also suggested a possible initial gain for the dollar over the first 24hrs of 2-3% and the DXY as of now is up close to 1.9%. What kind of speech Trump gives when he speaks this evening may provide some sign of initial policy focus but there is no reason not to believe that he will focus on tax cutting policies (if the Republicans win the House); trade tariffs and deportations. All inflationary and all therefore likely to lift yields and the US dollar.”

• Crude Oil drops over 2.5% on the back of the US presidential election outcome. 
• Tropical storm Rafael fades into the background as Trump secures a new term as US President. 
• The US Dollar Index rallies firmly and gains nearly 2% on Wednesday. 

Crude Oil slides lower and drops nearly 3% on Wednesday following the US presidential election outcome, which fell in favor of former President Donald Trump. One of Trump’s promises in the campaign running up to the election was to support and open up more drilling for Oil to become a bigger net producer. This would create another imbalance in the markets between supply and demand, with Oil prices likely to trade lower than current levels. 

The US Dollar Index (DXY), which tracks the performance of the Greenback against six other currencies, rallies and gains nearly 2% on Wednesday, not only on the back that Donald Trump has secured a fresh term. The fact that the Republicans have a chance of controlling the House of Representatives after getting control of the Senate means that Trump would have complete control of the decision system and could get several packages, reforms, and tariff implementations done without any issues. 

At the time of writing, Crude Oil (WTI) trades at $69.70  and Brent Crude at $73.44.

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 that roughly 1.7 million barrels would be taken out of production daily. 
• Russian data show crude production in October was almost in line with its target under the OPEC+ agreement, according to people familiar with figures from the Energy Ministry, Bloomberg reports.
• Saudi Arabia lowered its Oil prices for buyers in Asia for December after members of the OPEC+ producers group said on Sunday they will delay production increases by one month, Reuters reports. 
• At 15:30 GMT, the Energy Information Administration (EIA) will release its weekly crude report for the week ending on November 1. Expectations are for a build of 1.8 million barrels compared to the previous draw of 0.515 million barrels. 

Oil Technical Analysis: There it goes

Crude Oil prices edge lower on Wednesday since former US President Donald Trump emerged as the winner of the US presidential election. In one of his last rallies, Trump confirmed that he wants to boost drilling and mining in the US again. That would mean that more Oil supply is set to hit markets and create another break in balance, with more supply than demand at hand. 

On the upside, the hefty technical level at $74.30, 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 arise. 

The 55-day SMA at $70.87, has lost control of the situation and is no longer supporting prices that have drifted too far off. Traders need to look much lower at $67.12, a level that supported the price in May and June 2023. In case that level breaks, the 2024 year-to-date low emerges at $64.75 followed by $64.38, the low from 2023.

US WTI Crude Oil: Daily Chart

The clear victory for president Trump overnight poses significant downside risks to the growth outlook for the eurozone – and especially that of export-orientated Germany and the Netherlands, ABN AMRO’s economists note.

Downside risks to eurozone growth and inflation increase

“Trump’s flagship policy is for a universal tariff on all US imports, with a rate that (depending on which speech you listen to) has ranged from 10-20%. We estimate that a 10% universal tariff would lead to a sharp fall in eurozone exports, and hit eurozone growth to the tune of 1.5pp over the coming years, meaning the economy would likely see a renewed stagnation instead of continuing along its recovery path.”

“While it remains highly uncertain to what degree Trump will go ahead with his tariff plans, the high likelihood that his Republican party will gain a House majority to accompany its new Senate majority significantly raises the risk that he goes ahead with the full tariff agenda. We are currently reviewing our base case for the US and eurozone economies and will have much more to say on this over the coming weeks.”

“For now, we judge the downside risks to eurozone growth and inflation to have significantly increased, which would mean the ECB cutting rates at a potentially faster pace and/or rates going even lower than our current expectation for a 1.5% terminal rate. We will give further updates in due course. In the meantime, see our previous write-up here on what Trump would mean for Europe.”

• EUR/GBP has sold-off back down to the lows of its short-term range. 
• It is probably in a sideways trend and is likely to encounter stubborn support at the range lows. 

EUR/GBP declines all the way back down to the base of its six-week range (red dashed line on chart) at roughly 0.8311; it is likely to encounter firm support at the level.

EUR/GBP 4-hour Chart 

The pair is probably in a short-term sideways trend and given the technical analysis principle that “the trend is your friend” the odds favor an extension of this range-bound price action. 

Therefore, if EUR/GBP stops selling off at the range floor and starts to bounce higher it would confirm that the sideways trend was extending. That said, price has not slowed its descent yet, is still pushing lower and showing no signs of a bounce. 

If the bearish behavior continues and EUR/GBP breaks decisively below the 0.8311 floor, it would suggest the medium and long-term downtrends were reasserting themselves, and the pair was likely to fall further. However, it should be noted these levels represent over two-year lows for the pair.

Nevertheless, a clean break below them, by a longer-than-average daily candlestick below the 0.8311 lows, or perhaps by three consecutive red candles, would confirm a decisive breakdown. Such a move would probably then lead to a sell-off to around the 0.8240 level, this being the 61.8% Fibonacci extension of the height of the range extrapolated lower. 

• USD/CAD bounces back above 1.3900 as Trump’s victory strengthens the US Dollar.
• Investors expect the Fed to cut interest rates by 25 bps to 4.50%-4.75%.
• The BoC delivered a bigger rate cut due to slowing inflation and weak labor demand.

The USD/CAD pair recovers Tuesday’s sell-off and returns above the key figure of 1.3900 in North American trading hours on Wednesday. The Loonie pair strengthens as the US Dollar (USD) looks set to register highest gains in single trading day in more than four years. The US Dollar Index (DXY), which discovers Greenback’s value against six major currencies, posts a fresh four-month high near 105.40.

The USD Index surges as citizens of the United State (US) have elected Republican Donald Trump as their 47th President. Trump beat his Democratic rival Kamala Harris in key battleground states takes by Senate. Risk-perceived currencies have been hit hard by Trump’s victory as investors expect higher import tariffs and lower corporate taxes in his administration. The scenario looks favorable for the US Dollar as it will boost corporate investment and labor demand.

Going forward, investors will focus to the Federal Reserve’s (Fed) monetary policy decision, which is scheduled for Thursday. Traders have priced in an interest rate reduction by 25 basis points (bps) to 4.50%-4.75%, according to the CME FedWatch tool. This would be the second interest rate cut of this year. In September, the Fed started the policy-easing cycle, however, the rate-cut size was 50 bps. Investors will also pay attention to the impact of Trump victory on the inflation outlook and the interest rate path.

Though the Canadian Dollar (CAD) is weak against the US Dollar, it is performing strongly against other currencies even though the Bank of Canada (BoC) is expected to cut interest rates further. The BoC minutes for the October meeting in which the central bank cut interest rates by a larger-than-usual size of 50 bps showed that policymakers are confident that the disinflationary trend is intact and labor demand is weak.

"Members felt that a larger step was appropriate given the ongoing softness in the labor market and the need for stronger economic growth to absorb excess supply," it said.

• NZD/USD declines after Trump wins the US presidential election, boosting USD. 
• The Kiwi Dollar is further hampered by weak NZ labor market data showing a rise in joblessness. 
• NZD/USD could fall further if the policy trajectories of the two central banks diverge.

NZD/USD trades down by over three quarters of a percent in the 0.5940s as the US Dollar (USD) strengthens across the board following the announcement that the Republican nominee Donald Trump won the US presidential election. 

In addition, the Republican party gained majorities in both the US Senate and US Congress. This will make it easier for Trump to implement his Dollar-positive economic agenda, including higher tariffs on foreign imports and overall lower taxes. 

The reason Trump’s policies are bullish for the Dollar is because they will likely lead to increased spending, higher prices and rising inflation. This, in turn, will probably delay the Federal Reserve (Fed) from cutting interest rates. Higher interest rates attract greater foreign capital inflows so are positive for the Greenback. 

New Zealand (NZ) employment data came out as the votes were being counted in the US and these showed the Unemployment Rate rising to 4.8% in Q3 from 4.6% in Q2. That said the result was lower than the 5.0% expected. 

NZ Employment Change data declined by 0.5% in Q3, which was lower than the 0.4% decline forecast. The Labor Cost Index, a measure of wages, also fell below expectations, registering a 0.6% rise versus the 0.7% expected. ¡

The data will probably not change the outlook for the Reserve Bank of New Zealand’s (RBNZ) monetary policy – a major driver of NZD. Michael Gordon, Senior Economist at Westpac NZ, put the generally weak labor market and rise in joblessness down to, “more young people exiting the labor force, with study providing an outlet.”

NZ inflation declined to 2.2% in the September quarter, bringing it back inside the RBNZ’s target range of 1-3%. This prompted the central bank to lower its official cash rate (OCR) by a “double-dose” 50 basis points (bps) (0.50%) to 4.75% at its October meeting. This was the second consecutive rate cut from the bank and was as expected. 

Given the weakness of the NZ economy – Gross Domestic Product (GDP) fell by 0.2% in Q2 – and an overall long-term decline in demand from its largest trading partner China, the RBNZ is expected to implement further interest rate cuts to stimulate growth. This is likely to have a negative impact on NZD/USD going forward, particularly as the pace of Fed cuts slows down from Trump’s inflationary policies. 

• The US Dollar is firmly in the green, with more than one-percentage-point gain against most major peers. 
• Former US President Donald Trump has secured the 270 electoral votes needed to become the next US president. 
• The US Dollar index broke above 105.00, the highest level since July, and retreated slightly afterward. 

The US Dollar (USD) rises sharply on Wednesday after former US President Donald Trump secured enough electoral votes to become the next US president. The former US President has secured 277  votes, more than enough to surpass the magic 270 threshold needed to secure a majority. An additional element that might result in more US Dollar strength is the fact that the Republicans have secured a majority in the Senate. While the race to control the US House of Representatives is still undecided, it looks like Trump will not be a lame-duck president and will have support from both institutions when it comes to passing laws. 

The US economic calendar is very light on Wednesday. It looks like traders will be able to further assess and focus on the outcome of the US presidential election. Besides the Mortgage Bankers Association (MBA) weekly Mortgage Application numbers, nothing special is expected on the economic data front. 

Daily digest market movers: Trump has been elected as US president

• At the time of writing, former US President Donald Trump has secured 277 electoral votes and has comfortably reached the 270 threshold to win. Vice President Kamala Harris is lagging behind with only 224. 
• Asian equities saw China being hurt, with tariffs underway once Trump is sworn in next year. European and US equities are rallying higher. 
• 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 97.5% probability. More interesting is the December 18 meeting, where a 50 bps interest-rate cut from the current level is expected by a 68.4% chance, suggesting that markets anticipate a rate cut this week and in December. Before the US election outcome, the probability was still at 80%.
• The US 10-year benchmark rate trades at 4.35%, settling down a bit after hitting 4.46% earlier.  

US Dollar Index Technical Analysis: Hail to the King!

The US Dollar Index (DXY) is reclaiming its throne as the King of all currencies. The Greenback has been gaining in several big figures against most of the major G20 currencies, resulting in a US Dollar Index that broke above the 105.00 level.  With a small fade taking place at the moment, looking for near support will be vital, while markets will need to wait for a few months until Donald Trump is sworn in again as President and starts to take measures, introduce tariffs, and other elements that will move all asset classes. 

The new levels to look out for on the upside are not seen since June and July. The first up is 105.53 (April 11 high), a very firm cap resistance, with 105.89 (May 2 high) just above. Once that is broken, 106.52, the high of April and a double top, will be the last level standing before starting to talk about 107.00.

On the downside, last week’s peak at 104.63 looks to be the first pivotal support nearby. Should the fade become bigger, the round level of 104.00 and the 200-day Simple Moving Average (SMA) at 103.85 should refrain from sending the DXY any lower. 

US Dollar Index: Daily Chart

USD/JPY rose, as polls skewed in favour of Trump at point of writing. Pair was last seen at 153.91. Daily momentum is flat while RSI rose. Near term risks skewed to the upside. Resistance at 155 and 156.50 (76.4% fibo). Support at 151.60 (200 DMA), 150.60/70 levels (50% fibo retracement of Jul high to Sep low, 100 DMA), OCBC’ FX analysts Frances Cheung and Christopher Wong note.

US election noises may cloud the outlook

“Aside from US elections, Japan is holding a special parliamentary session on 11 Nov to choose the Prime Minister. Ishiba’s cabinet will formally resign on the morning of 11 Nov. Prime ministerial vote can take up to two rounds, where in the first round, lawmakers of different political party typically vote for their respective leaders making it unlikely for any candidate to secure a clear majority. In this case, top two candidates will go into a run-off (in the second round) that only requires a simple majority to win.”

“Assuming no major upset. i.e. Ishiba may still win and a minority government may suffice with opposition DPP and JIP as partners on confidence and supply agreement. Point to note is that these opposition partners had earlier critique BoJ for raising rates. This morning in release of BoJ minutes, one member indicated that policy rate could be 1% in 2H 2025. Last week, Governor Ueda indicated that the current political situation in Japan wouldn’t stop him from lifting rates if prices and the economy stay in line with BoJ’s forecast.”

“Elsewhere, data continues to show wage pressure growing and services inflation broadening. Policy normalisation at BoJ and Fed takes different form (Fed cut vs. BoJ hike cycle) and this should continue to underpin the broad direction to the downside. But in the interim, US election noises may cloud the outlook. We also caution that any sharp, excessive move to the upside may soon bring in chatters of intervention to smooth one-sided moves.”

The Euro (EUR) traded sharply lower, in response to US elections. Pair was last seen at 1.0718 levels, OCBC’ FX analysts Frances Cheung and Christopher Wong note.

EUR/USD is under the pressure

The sensitivity of EUR to US elections appears to have picked up by quite a fair bit. Threat of Trump tariff on all imports by up to 20% can hurt EUR as US was the largest partner for EU exports of goods in 2023.

Momentum is mild bullish but RSI fell. Resistance here at 1.0830 (61.8% fibo retracement of 2024 low to high), 1.09 (50% fibo), 1.0940 (100 DMA). Risks remain 2- way dependent on outcome of US election results (which is still trickling as we write).

The ‘Trump Trade’ was fully unleashed in the market this morning as evidenced across stocks, bonds, FX and crypto. For months the Trump trade has been based around the expectation that a second Trump presidency would hike tariffs, make tax cuts permanent and strip back regulation, all of which could boost US growth and inflation in the first instance, Rabobank’s FX analyst Jane Foley notes.

USD is the best performing G10 currency

“Although its rally has already started to wane, unsurprising, the USD is the best performing G10 currency on a 1 day view this morning. The EUR is the worst performer among its peers. A second Trump Presidency raises an uncomfortable array of issues for Europe on issues around tariffs and defence and Ukraine.”

“Too early to draw strong conclusions on the impact of Trump’s policies and this is resulting in a reluctance by investors to extend the USD’s rally for the time being. This afternoon, ECB President Lagarde has an opportunity to speak. The market will be watching whether ECB policy-makers view the US election result as likely to have a greater impact on European growth or inflation, though it is likely to be some time before this is clear.”

“While it will take time before the markets have the information needed to develop a strong narrative on the impact of Trump’s agenda on the international economy, the domestic inflationary impact of his policy does suggest a stronger USD through 2025. At the same time structural issues in Europe could weigh on the single currency medium-term. We will be publishing revised USD forecasts in the next couple of days.”

• USD/CHF holds onto intraday gains near 0.8750 on US Trump’s victory.
• Market participants are expected to face higher import tariffs in Trump’s administration.
• The Swiss Franc pair rallies after breaking above 38.2% Fibo retracement at 0.8700.

The USD/CHF pair rallies to near 0.8750 in Wednesday’s European session. The Swiss Franc pair surges to a fresh three-month high as the US Dollar (USD) soars with former President Donald Trump gaining an unconquered lead over Democratic rival Kamala Harris in the United States (US) presidential elections.

The US Dollar is one of the major beneficiaries of Trump’s victory as he is expected to implement protectionist policies after taking the Senate in a way to boost domestic investment. Trump vowed to raise import tariffs by 10% and lower corporate taxes if he comes into power.

The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, surrenders some of its intraday gains but is still 1.30% higher, around 104.80, at the time of writing.

Going forward, investors will focus on the Federal Reserve’s (Fed) interest rate decision, which will be announced on Thursday. The Fed is expected to cut interest rates by 25 basis points (bps) to 4.50%-4.75%.

Meanwhile, the Swiss Franc (CHF) remains on the back foot against the US Dollar for more than a month as the Swiss National Bank (SNB) is expected to cut interest rates again in the last monetary policy meeting of this year in December.

USD/CHF delivers a sharp rally after breaking above the 38.2% Fibonacci retracement around 0.8700. The tool is plotted from May’s high of 0.9225 to September 6 low of 0.8375. The Swiss Franc pair bounced back sharply after gaining ground near the 50-day Exponential Moving Average (EMA), which trades around 0.8617 and has rallied to near the 200-day, which hovers around 0.8750.

The 14-day Relative Strength Index (RSI) climbs above 60.00, suggesting a fresh bullish momentum in sight.

More upside looks likely towards the round-level resistance of 0.8800 and the July 25 high of 0.8850 after sustaining above the 200-day EMA.

On the flip side, a downside move below the 50-day EMA near 0.8617 will push the asset lower to a 23.6% Fibo retracement level near 0.8570, followed by the psychological support of 0.8500.

USD/CHF daily chart

The US Dollar (USD) traded higher, as vote count skews in favour of Trump at time of writing. DXY was last at 104.92, OCBC’ FX analysts Frances Cheung and Christopher Wong note.

Trump outcome may see a play-up of US-China trade tensions

“The 7 swings states of Georgia, North Carolina, Pennsylvania, Michigan, Wisconsin, Arizona and Nevada matter (account for 93 electoral votes). Early count (based of 79% votes counted) shows Trump gaining the momentum in Georgia while West Virginia flipped in favour of Trump. It is still early to call at this point and news flow of tally count should continue to drive 2-way trades in FX markets intra-day.”

Daily momentum remains bearish while RSI rose from near oversold conditions. Resistance at 105.20 levels. Support 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).

“Outcome will have implications on FX as shifts in fiscal, foreign and trade policies may occur, depending on whether Trump or Harris is elected as the next President. A Trump outcome may see a play-up of US-China trade tensions and should pose upward pressure on USD, UST yields (i.e. long gold, short CNH). However, a Kamala Harris outcome should see anxiety ease. On this note, USD, UST yield can ease and Asian/ high-beta FX should find a breather.”

Markets remain strongly inclined to trade a Red Sweep. 10y USTs still around 15bps higher on the day and 5s30s curve bear steepening. Market pricing for the Fed's terminal has risen by around 10bps to 3.73% for end-2025 (around 100bps of further easing including this week). The USD has continued to trade around 1.5% higher, TDS’ global strategies analysts note.

Markets remain strongly inclined to trade a Red Sweep

“EUR front end is rallying by around 9bps with strong bull steepening as markets expect the ECB will need to ease further. 10y Bunds will find it hard to disentangle from the outright moves in USTs, with the divergence theme seen more in the front end. So we favour a steeper 2s10s Bund curve (more bull than bear), with US swap spreads tightening as rates sell off, and EUR swap spreads wider vs the US.”

“This is mostly in line with our expectations. A declaration of a red sweep here should have less impact on rates after the initial market reaction. Risk assets are more likely to trade with a stronger bias, with S&P futures currently up almost 2%. We think in this case the focus will quickly turn towards the sequencing of policy: Fiscal, Tariffs and Immigration.”

“With tariffs the most likely first step, it is key to highlight with a broad brush that is inflationary for the US (we estimate almost 1pp added to CPI in 2025), while negative growth for the Eurozone and other trading partners. So central bank pricing is moving with that playbook for now. We think the key risk for markets from here comes from the results for the House. Markets are priced around 50/50 for a Red Sweep versus Divided Government.”

Republican clean sweep makes it significantly easier to implement full policy agenda, ABN AMRO’s economists note.

Parity for EUR/USD can be on the cards

“Risks very firmly tilted to the downside for US and global economic growth and to the upside for US inflation. While Fed policy could be tighter than our current base line, the ECB could cut rates faster.”

“Republican sweep sets the stage for US-European rates divergence. Parity for EUR/USD could be on the cards. We will publish an updated macro and market base scenario later this month.”

EUR/USD has experienced a deeper pullback after confirming a double top, BBH’s FX analysts note.

Potential supports are located at June low of 1.0665 and 1.0600

“EUR/USD has dipped below the 200-DMA (1.0870) and the trend line drawn since October 2023 denoting prevalence of downward momentum.”

“The decline is a bit stretched but signals of rebound are not yet visible. Inability to reclaim the MA at 1.0870 could lead to persistence in down move. Next potential supports are located at June low of 1.0665 and 1.0600.”

• Gold goes out of favor as capital piles into the US Dollar, Bitcoin and Stocks. 
• Donald Trump is now expected almost certainly to be the next US President. 
• Technically, XAU/USD extends its short-term downtrend to key support. 

Gold (XAU/USD) trades down by half a percent in the $2,720s on Wednesday due to the US Dollar (USD) strengthening after current results from the US presidential election show Republican nominee Donald Trump on 267 electoral votes, only three short of a victory. Vice President Kamala Harris, meanwhile, is trailing Trump on 224, according to the Associated Press. USD is gaining due to the market view that Donald Trump’s economic agenda and tariffs will strengthen the US Dollar. This, in turn, is negative for Gold since it is mainly priced and traded in USD. 

Investors’ preference for other riskier assets, including Bitcoin (BTC) and equities, also sees flows exiting Gold. 

The uncertainty surrounding the election right up until the end was a driver of safety flows into Gold, which was partly responsible for keeping Gold’s price close to its record highs last week. However, now that the result is almost confirmed, have diminished. 

Trump’s claims that he can end the conflicts in the Middle East and Ukraine, though seemingly exaggerated (“I will have that (Ukraine-Russia) war settled in one day – 24hrs,” Trump said once), could also be reducing safe-haven flows into Gold. 

Gold losses out as Trump trade fully materializes  

Gold loses out to the US Dollar, Bitcoin and US stock index futures as markets celebrate the expected victory of Donald Trump in the US presidential election.

The US Dollar Index (DXY) rose over 1.3% to a peak of 105.32 on Wednesday as it became clear Trump was almost certain of winning. 

US stock futures were also up on the news, with the S&P 500 futures contract up 2.2% at 5,909 in pre-market trading and the Dow 30 futures contract up over 1.3% to 42,770, as markets rejoiced in anticipation of Trump’s likely lower tax agenda. 

Likewise, Bitcoin rose to a new all-time high of $75,407 due to the looser regulatory environment for crypto promised by Trump. 

The pivot back into the US Dollar, Bitcoin and stocks, however, saw capital flow out of bonds and commodities, with US Treasuries, Gold, Oil, Silver and Copper all falling.

Technical Analysis: XAU/USD finds support at key level

Gold falls to support at $2,709, the base of a former range, as it trends lower. The precious metal is probably now in a short-term downtrend and, given the principle that “the trend is your friend,” it is vulnerable to further weakness in the near term.

XAU/USD Daily Chart

A break below the range and the daily low at $2,701 would confirm a lower low and further weakness. Such a move would probably fall to the next support level at $2,687, the September 26 swing high.

The Relative Strength Index (RSI) is falling in line with price, suggesting bearish pressure accompanies the downward trend. 

That said, the precious metal remains in an uptrend on a medium and long-term basis, and a material risk remains that it could reverse course and begin rising in line with these broader up cycles. However, there are no technical signs of this happening yet.

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

Poland’s central bank (NBP) will announce its monthly interest rate decision today. It is unanimously expected that the CB will not change its base rate or guidance today, Commerzbank’s FX analyst Tatha Ghose notes.

Polish inflation moderates to close to target

“Policymakers will likely cite the 5% inflation rate (last headline reading; last core reading was 4.3%) as the reason not to consider rate cuts. At this time, the zloty exchange rate is also weak from rising global market risk aversion, which adds further justification for policy caution. The underlying reality, however, is that Polish inflation, like inflation in many other EU countries, has already moderated to close to target on seasonally-adjusted month-on-month basis.”

“A recent upward spike from the unwinding of pandemic era energy and food pricing measures had almost negligible impact and quickly settled down. In this environment, there is no real justification for maintaining a 5.75% interest rate, in particular as the real economy has entered a soft patch. But, NBP’s monetary policy is basically ‘politicized’, with (governor) Adam Glapinski’s MPC faction digging its heels in against rate cuts since the time its political opposition came to power.”

“We anticipate nothing else but a repetition of such points today and at Thursday’s press conference. We maintain that this artificially held hawkish monetary stance should not be working positively for the zloty’s valuation as it represents a breakdown of proper monetary policy – it should act as a drag, instead.”

Impulsive advance in early Asian trade could extend to 7.1550 before levelling off. In the longer run, downward momentum has largely faded; USD could trade in a broad 7.0900/7.1800 range, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann notes.

USD to trade in a broad 7.0900/7.1800 range

24-HOUR VIEW: “On Monday, USD plunged to 7.0876 and then rebounded. Yesterday, we pointed out that ‘The rebound in oversold conditions suggests that instead of continuing to weaken, USD is likely to trade in a range, probably between 7.1000 and 7.1250.’ USD then traded in a 7.0990/7.1169 range. In a sudden move in early Asian trade today, it surged. The impulsive advance could extend to 7.1550 before levelling off. The major resistance at 7.1800 is unlikely to come into view. Support levels are at 7.1200 and 7.1000.”

1-3 WEEKS VIEW: “We turned negative in USD last Friday (01 Nov, spot at 7.1250). We indicated USD ‘could edge lower, but any decline is expected to encounter solid support at 7.1000.’ After USD plummeted below 7.1000, we highlighted yesterday that ‘The increasing downward momentum, combined with the breach of 7.1000, suggests USD is likely to decline further, potentially to 7.0660.’ In a sudden move early today, USD jumped. While our ‘strong resistance’ level at 7.1380 has not been breached yet, downward momentum has largely faded. The outlook is mixed from here, and USD could trade in a broad 7.0900/7.1800 range for now.”

• USD/JPY soars to near 154.40 as US Trump declares victory and is on course to take the Senate.
• Investors will shift focus to the Fed’s monetary policy meeting on Thursday.
• The BoJ would struggle to tighten its interest rate policy further.

The USD/JPY pair refreshes a four-month high near 154.40 in European trading hours on Wednesday. The asset strengthens as the US Dollar (USD) outperforms its rival currencies with the victory of Republican candidate Donald Trump in sight. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, climbs above 105.00.

According to the Associated Press, Donald Trump has already won three out of seven major battleground states of North Carolina, Pennsylvania, and Georgia and leading over Democratic rival Kamala Harris in the rest.

Market experts see Trump’s victory as favorable for the US Dollar for a longer-term horizon. Trump vowed to hike tariffs by 10% on imports, except from China which is expected to face even higher and lower corporate taxes. A scenario that will boost domestic investments, employment, and overall demand, which will prompt upside risks to inflation.

Meanwhile, Trump has declared victory after gaining an undefeatable lead, according to BBC News. With Trump’s victory seeming assured, investors will shift focus to the Federal Reserve’s (Fed) monetary policy decision, which will be announced on Thursday. The Fed will cut interest rates by 25 basis points (bps) to 4.50%-4.75%, according to the CME FedWatch tool. Investors will pay close attention to Fed Chair Jerome Powell’s interest rate guidance after Trump’s victory.

In Japan’s region, an absence of specific interest rate hike plans in the Bank of Japan (BoJ) policy meeting minutes of October 31 has weighed on the Japanese Yen (JPY). “We will scrutinize data available at the time at each policy meeting, and update our view on the economy and outlook in deciding policy,” BoJ Governor Kazuo Ueda said in the monetary policy statement after leaving interest rates unchanged at 0.25%.

The BoJ appears to be incapable of further policy tightening as Trump’s victory is expected to impact Japan’s export sector.

USD/CNH is up around 1% as markets price in renewed trade wars, ING’s FX analyst Chris Turner notes.

Emerging markets to remain under pressure

“In our pre-election scenario analysis, we felt something like 7.30 would be the best case for the onshore USD/CNY under a Trump win scenario where local Chinese authorities would not allow further depreciation. We take the view that they would not devalue the renminbi – as they did in summer 2019 – and instead are playing the long game of keeping the renminbi as a store of value to compete on the world stage. However, the renminbi will of course remain under pressure.”

“In Europe, much attention is on the Hungarian forint. It looks like the National Bank of Hungary will have to abandon its easing cycle to concentrate on supporting the forint, where EUR/HUF is moving through 410. Look out for action at National Bank of Hungary open market operations – e.g., leaving the market short of liquidity in an attempt to tighten overnight rates and support the forint. Hungarian forward points look to stay under widening pressure.”

“In Latam, the Mexican peso has been hit hard (off 3%). 2025 could be a rough year for the peso were presumed president Trump to opine about not renewing the USMCA at its review in 2026. High volatility is also undermining the carry trade and it’s hard to rule out a move to 22.00 over coming weeks. Both BRL and CLP had a poor Trump 1.0. Both will be under pressure again but a 50bp rate hike from Brazil today should offer some reprieve.”

Silver prices (XAG/USD) fell on Wednesday, according to FXStreet data. Silver trades at $32.28 per troy ounce, down 1.12% from the $32.64 it cost on Tuesday.

Silver prices have increased by 35.64% 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 84.33 on Wednesday, up from 84.04 on Tuesday.

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The New Zealand Dollar (NZD) could break below 0.5940; a sustained decline below this level is unlikely. 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 notes.

Likely to trade in a 0.5940/0.6040 range for now

24-HOUR VIEW: “We expected NZD to trade in a 0.5955/0.5995 range yesterday. Instead of trading in a range, NZD rose to 0.6016, closing at 0.6008 (+0.58%). The sudden sharp sell-off earlier today has resulted in a mixed outlook. That said, there is room for NZD to break the major support at 0.5940 but a clear break below this level is unlikely.”

1-3 WEEKS VIEW: “We revised our NZD outlook from negative to neutral two days ago (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 price may depreciate toward the psychological level of $32.00.
• Immediate resistance appears around the nine- and 14-day EMAs at the $32.83 and $32.84 levels, respectively.
• The nine-day EMA is aligned with the 14-day EMA; a downward crossover would indicate a weakening of short-term momentum.

Silver price (XAG/USD) depreciates to near $32.20 during the European session on Wednesday. The daily chart analysis indicates a potential shift in momentum from bullish to bearish, as the nine-day Exponential Moving Average (EMA) aligns with the 14-day EMA. A downward crossover here would signal weakening short-term momentum.

Additionally, the 14-day Relative Strength Index (RSI) is consolidating just below the 50 level, indicating an ongoing bearish bias. However, traders would like to see further movement to gain a clear trend direction for the XAG/USD pair.

Moreover, the Moving Average Convergence Divergence (MACD) line diverging below the signal line suggests a potential bearish pressure on the Silver price. Despite this, the overall trend remains bullish as the MACD line remains above the centerline (zero line).

On the downside, Silver price may encounter immediate support at the psychological level of $32.00. A drop below this level could exert downward pressure on the precious metal, potentially pushing the price toward the seven-week low at $30.12, recorded on October 8.

In terms of the upside, the Silver price could target the nine- and 14-day EMAs at the $32.83 and $32.84 levels, respectively. A breakthrough above these EMAs could trigger a shift toward a bullish bias, with the potential for the price to revisit the area near the all-time high of $34.87, reached on October 22.

XAG/USD: Daily Chart

• EUR/USD is hit badly with Trump’s victory in the US presidential election in sight.
• The Fed is expected to cut interest rates again on Thursday but by a lower size of 25 bps.
• The Euro underperforms across the board as concerns over Eurozone economic growth have deepened.

EUR/USD slightly recovers to 1.0750 after nosediving to near 1.0700 in Wednesday’s European session, the lowest level in over four months. The major currency pair hits badly as Republican candidate Donald Trump appears to take the Senate from Democrats, with Grand Old Party (GOP) gaining an unconquered lead in key battleground states, according to The Associated Press. The agency shows that Trump is inches away from winning 270 seats, a level the party needs to cross to form the government.

Meanwhile, Trump has declared victory over Democratic rival Kamala Harris, according to Sky News.

A clear victory of Trump in sight keeps the US Dollar (USD) on the front foot. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, rallies to near 105.30. Market action clearly shows that Trump’s victory is favorable for the US Dollar, which was already anticipated as the Republican candidate vowed to hike tariffs on imports and lower corporate taxes. A scenario that will boost overall business activity and labor demand and escalate inflationary pressures. 

However, the plot is unfavorable for currencies of economies like the Eurozone, the United Kingdom (UK), China, and Canada, which are major trading partners of the United States (US). Trump’s protectionist policies will directly impact the export sector of the above-mentioned economies, which will boost the risks of an economic downturn.

Going forward, 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 in a 25-basis point (bps) interest rate cut, pushing rates lower to the 4.50%-4.75% range. This would be the second interest rate cut by the Fed in a row. However, the rate cut size will be lower than the 50 bps announced in the September meeting.

Investors will also focus on Fed Chair Jerome Powell’s press conference to get cues about the impact of Trump’s victory on the interest rate path and the inflation outlook.

Daily digest market movers: EUR/USD is punished by upbeat US Dollar and weak Euro

• EUR/USD faces severe selling pressure due to the US Dollar’s outperformance and the Euro’s (EUR) sharp depreciation against other major currencies. The outlook of the Euro has weakened as market participants expect that the implementation of Trump’s protectionist policies will significantly damage European economic growth.
• According to the Dutch bank, Trump's tariffs would shave approximately 1.5 percentage points off European growth, translating to a potential €260 billion economic loss based on Europe's estimated 2024 GDP of €17.4 trillion.
• Should Europe's growth falter under Trump's tariffs, the European Central Bank (ECB) may be compelled to respond aggressively, slashing rates to near zero by 2025, according to Euronews.
• Trump’s victory would likely force the ECB to cut its Deposit Facility Rate by a larger-than-usual size of 50 bps in its next monetary policy meeting in December. This would be the fourth interest rate cut by the ECB this year.

Technical Analysis: EUR/USD posts fresh four-month low near 1.0700

EUR/USD slides swiftly to near the key support of 1.0700. The outlook of the major currency pair weakens as it breaks below an upward-sloping trendline around 1.0750, which is plotted from the April 16 low at around 1.0600

The declining 50-day Exponential Moving Average (EMA) near 1.0930 suggests a firm bearish trend.

Additionally, the 14-day Relative Strength Index (RSI) retreats below 40.00, suggesting a resumption of the bearish momentum.

Looking down, the shared currency pair could decline to the year-to-date (YTD) low of 1.0600. On the upside, the round-level resistance of 1.0800 will act as a key barrier for the Euro bulls.

USD/JPY is just over 1% higher today as it reacts to the rise in US yields, ING’s FX analyst Chris Turner notes.  

Broad USD strength to dominate

“The Yen (JPY) also acts as a liquid proxy to Asian currencies about to be hit with another trade war. The Bank of Japan will not like another big run up in USD/JPY, although FX intervention looks unlikely amidst broad dollar gains.”

“We think the JPY can outperform on the crosses especially were the Republicans not to gain the House. Under this scenario, US equity markets (particularly bank stocks) could hand back some of their recent gains. For the time being, however, expect broad USD strength to dominate and 155 to prove the direction of travel.”

The Australian Dollar (AUD) could further but a break of the major support at 0.6535 is unlikely. In the longer run, month-long AUD weakness has stabilised; AUD is expected to trade in a 0.6535/0.6655 range for now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann notes.

AUD is expected to trade in a 0.6535/0.6655 range for now

24-HOUR VIEW: “Our view of sideways trading yesterday was incorrect, as AUD rose sharply, reaching a high of 0.6641. The advance was short-lived, as AUD plummeted from the high. AUD could drop further but a break of the major support at 0.6535 is unlikely (minor support is at 0.6565). Resistance levels are at 0.6620 and 0.6640.”

1-3 WEEKS VIEW: “Our most recent narrative was from Monday (04 Nov, spot at 0.6585), wherein the recent ‘month-long AUD weakness has stabilised,’ and AUD ‘is expected to ‘trade in a 0.6535/0.6655 range for now.’ Yesterday, AUD rose to a high of 0.6641, and then plummeted today. The price movements provides no fresh clues and we continue to expect AUD to trade in a 0.6535/0.6655 range.”

• AUD/USD slumps to a multi-month low amid the Trump enthusiasm-led USD rally.
• Fears of fresh tariffs and trade war with China further exert pressure on the Aussie. 
• The RBA’s hawkish stance and the risk-on impulse help limit losses for the major.

The AUD/USD pair trims a part of heavy intraday losses and recovers around 70-75 pips from the vicinity of the 0.6500 psychological mark, or its lowest level since August 8 touched earlier this Wednesday. Spot prices, however, remain deep in negative territory through the first half of the European session and currently trade just below the 0.6600 mark, still down over 0.85% for the day.

The sharp intraday fall of over 130 pips for the AUD/USD pair was led by a strong pickup in the US Dollar (USD) demand. In fact, the USD Index (DXY) shot to a four-month top after the US presidential election exit polls showed that Republican nominee Donald Trump is leading the race. Furthermore, Republicans are projected to take the majority of the House after securing the Senate. 

Meanwhile, a Trump presidency revives fears about the launch of fresh tariffs and a trade war with China, which further weighs on the China-proxy Australian Dollar (AUD). Moreover, deficit-spending concerns and bets for smaller rate cuts by the Federal Reserve (Fed) push the US Treasury bond yields higher, further underpinning the USD and exerting pressure on the AUD/USD pair. 

That said, the risk-on impulse – as depicted by a sharp rally in the US equity futures – prompts some profit-taking around the safe-haven Greenback. Apart from this, the Reserve Bank of Australia's (RBA) hawkish stance and signs that China's big stimulus push is helping improve business conditions limit losses for the Aussie, prompting intraday short-covering around the AUD/USD pair. 

It, however, remains to be seen if spot prices can build on momentum or if the attempted recovery is seen as a selling opportunity amid the underlying strong bullish sentiment surrounding the USD. Hence, it will be prudent to wait for strong follow-through buying before confirming that the AUD/USD pair has formed a near-term bottom and positioning for any further appreciating move.

European politicians will be waking up to face their fears this Wednesday morning. As it now looks like Trump will take the presidency with a strong popular mandate, his trade agenda of levelling the playing field will weigh heavily on the open economy of continental Europe, ING’s FX analyst Chris Turner notes.

Euro goes down on Trump’s possible win

“The euro has so far proved the weakest of the G10 currencies overnight and you can see why. The expectation is that Donald Trump extends his trade war from just China in his first term more broadly in his second term. This at a time of stagnant eurozone growth and self-reflection – especially in Germany – as to its future business model. Plans to export its way out of stagnation are no longer an option for the eurozone.”

“We believe this would be the worst scenario for EUR/USD – faced with renewed trade wars yet without the support to global growth that extended US tax cuts could deliver. Under such a scenario, EUR/USD could be sub parity in late 2025. This would be a scenario where the European Central Bank would have to cut rates deep into accommodative territory.”

“For the short term, EUR/USD would probably have fallen harder today if markets had not started to price a Trump win in October. But the direction of travel over coming days looks to be towards the 1.0550/0600 area, with EUR/USD struggling to sustain gains over 1.0800/0850 now.”

The Pound Sterling (GBP) could trade in a choppy and broad range of 1.2900/1.3040. In the longer run, for the time being, GBP is likely to trade in a 1.2900/1.3030 range, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann notes.

GBP is likely to trade in a 1.2900/1.3030 range

24-HOUR VIEW: “The sharp rise in GBP that sent it to a high of 1.3043 was surprising (we were expecting range trading). GBP was unable to hold on to its gains, as it plunged today. The outlook is unclear after the wide fluctuations. Further choppy trading is not ruled, likely within a broad 1.2910/1.3040 range.”

1-3 WEEKS VIEW: “Yesterday (05 Nov, spot at 1.2955), we pointed out that ‘the recent buildup in downward momentum has faded.’ We expect GBP to ‘trade in a 1.2900/1.3030 range for the time being.’ While GBP rose above 1.3030 (high of 1.3043), it plummeted from the high. The price action provides no fresh clues, and we continue to expect GBP to trade in a 1.2900/1.3030 range.”

The reaction to the US election so far in the FX market has been, as expected, a strong dollar across the board, ING’s FX analyst Francesco Pesole notes.

Expect a prolonged period of dollar outperformance

“There is no huge divergence across G10 currencies performance, where daily losses amount to around 1.0-1.7% except for the Canadian dollar, which is down by less than 1%. That mirrors a view that a Republican clean sweep is positive for the US economy and, by extension, Canadian exporters, as well as the fact that CAD will be less exposed to tariffs on China and geopolitical developments under a new Trump presidency.”

“The bear steepening and widespread selloff across the Treasury yield curve mirrors widespread expectations for an inflationary mix of domestic (fiscal and migration) and external (tariffs) policies from Trump. We are also observing some action in the short-term USD swap rates linked to a hawkish repricing in Fed rate expectations.”

“In line with our expectations and consensus, markets are holding on to expectations for a 25bp FOMC cut to 4.75% tomorrow, but the OIS curve has recorded some 10bp+ repricing across 2025 tenors. That embeds a policy rate close to 4.0% in June 2025, almost 100bp higher than mid-September pricing.”

• The Mexican Peso plunges several percentage points against its major pairs after Donald Trump secures 267 electoral votes, three away from victory. 
• Trump’s threats of whacking huge tariffs on Mexican imports is wreaking havoc with the Peso. 
• USD/MXN closes an open chart gap and extends its established uptrend within a rising channel.  

The Mexican Peso (MXN) plummets in its most-heavily traded pairs on Wednesday, especially versus the US Dollar (USD), against which it is down over two percent after results from the US presidential election show Republican nominee Donald Trump extremely close to victory. 

Trump leads with 267 electoral votes to Vice President Kamala Harris’ 224, according to latest figures from the Associated Press. This leaves Trump needing only three more electoral votes to reach 270 and enter the White House. The news that the Republican party has won a majority in the United States (US) Senate and might also scoop the Congress is further weighing on the Peso and lifting the Greenback in all its pairs.

The Peso’s massive drop against the USD is due to Trump’s threat to place punitive tariffs on Mexican imports as well as the overall uplift to USD from his Dollar-positive economic policies. 

Mexican Peso: Further upside could be down to who wins Congress

The Mexican Peso is currently trading at 20.70 to the US Dollar. However, it may experience even more weakness if the Republicans win a majority in Congress, according to forecasts by Mexican financial news website El Financiero. 

If Trump wins with a Republican majority in Congress, the Peso is likely to fall to between 21.14 and 22.26 against the US Dollar, said the website. 

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 also rattled by domestic woes

The Mexican Peso faces further negative pressure after the Mexican Supreme Court rejected proposals to alter a controversial new law allowing the election of judges by popular vote on Tuesday, according to El Financiero. 

The Mexican Supreme Court decided to reject the arguments of one of its own judges, Juan Luis González Alcántara, that the reform was partially unconstitutional because aspects of the new law undermines the independence of the judiciary. 

Instead, Alcántara, a known critic of the reforms, had proposed a modification to the law, only allowing the election of Supreme Court judges not all judges, which include thousands of lower court justices as well.

Critics argue the reform could increase concerns among foreign investors regarding the rule of law in Mexico and reduce inbound investment. 

Technical Analysis: USD/MXN closes gap and surges higher

USD/MXN shoots higher and closes the gap opened on Monday (red-shaded rectangle on the chart below). 

USD/MXN 4-hour Chart 

USD/MXN is 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. 

The Relative Strength Index (RSI) remains just below the overbought level of 70, suggesting there is still scope for further upside.

A break above the 20.80 high would probably confirm more gains, with 21.00 coming into view as the next key target and resistance level (round number, psychological support).  

Not only did the US dollar make significant gains last night. At the same time, the euro lost more than the other G10 currencies, Commerzbank’s Head of FX and Commodity Research Ulrich Leuchtmann notes.

Euro suffers a blow amid Trump win

“This is no coincidence. The euro area is likely to suffer disproportionately from a restrictive US trade policy. Not only because of its direct exports to the US. Should the US not remain the ultimate sink of global trade flows (or only in terms of trade that are more favorable for the US than before), global trade as a whole may suffer. This will affect the export nations. And quite a few of them are in the euro area. Germany, for example.”

“Furthermore, if one believes that exports are an important growth driver for a number of euro zone economies, one must also assume that a restrictive US trade policy will cement Europe's growth disadvantage vis-à-vis the US. This, too, would be negative for EUR/USD in the long term.”

“Because all these consequences are becoming apparent this morning, EUR/USD is suffering not only in the distant future, but also this morning – beyond the extent of general Greenback strength.”

• GBP/JPY may appreciate further as the BoE is highly expected to deliver a 25 basis points rate cut on Thursday.
• The Office for Budget Responsibility revised its 2025 inflation forecast to 2.6% from March's 1.5% estimate.
• BoJ Meeting Minutes indicated that board members largely agreed to continue to raise interest rates.

GBP/JPY extends its gains for the second successive session, trading around 198.30 during the European hours on Wednesday. However, the upside potential for the GBP/JPY cross seems possible as the Bank of England (BoE) is projected to lower interest rates by only 25 basis points on Thursday.

Investor expectations now point to fewer rate cuts in 2024 compared to projections made before last week’s budget announcement. The Office for Budget Responsibility recently revised its 2025 inflation forecast, increasing it to an average of 2.6% from March's 1.5% estimate. This update aligns closely with the BoE’s August forecast, which projects inflation at 2.4% in one year, 1.7% in two years, and 1.5% in three years.

Investors will closely monitor BoE Governor Andrew Bailey's press conference for insights into how the FY2025 budget might influence inflation expectations and shape monetary policy decisions in December.

The downside for the Japanese Yen (JPY) is expected to be limited, influenced by the hawkish tone in the minutes from the Bank of Japan’s (BoJ) recent meeting. The minutes showed broad agreement among board members to continue raising interest rates, as inflation and economic conditions appear to support the central bank's policy objectives.

The Jibun Bank Japan Services Business Activity Index fell to 49.7 in October, down from 53.1 in September, signaling a decline in services activity. This marks the first contraction since June, although it was marginal, with companies reporting slower sales.

With 2024 growth risk ebbing, we think the policy focus has shifted to 2025. The Standing Committee of the NPC may approve bank recapitalisation and local debt swap plans, but we see low probability of a budget revision for 2024. Additional fiscal stimulus to counter external risks will likely be planned at the December CEWC, Standard Chartered’s economists Shuang Ding and Hunter Chan notes.

In no hurry to respond to the US election

“China’s policy makers will likely reserve their firepower for next year as growth risks have decreased. The mid-October fiscal package made CNY 1.4tn additional spending possible in Q4, reducing downside risks. The official PMI returned to expansionary territory in October, consistent with the Caixin PMI and our SMEI survey, boding well for an activity rebound in Q4. We now see upside risk to our 2024 growth forecast of 4.8%. Senior government officials have recently become more confident in achieving the growth target of 5%.”

“The Standing Committee (SC) of the National People’s Congress (NPC) will conclude its session on 8 November, immediately after the US presidential election. Many market participants expect the SC to approve additional fiscal stimulus (including revising the 2024 budget), with the size of stimulus dependent on the US election outcome. We expect the SC to approve a CNY 1tn special central government bonds (CGBs) quota to replenish capital at six major banks, and a local special bonds quota of CNY 6-10tn for the debt swap to be used over 3-5 years. We see a below-50% chance of the 2024 CGB quota being increased. The government may wait until the Central Economic Work Conference (CEWC) in December to tackle external risks in a comprehensive way.” 

“If Harris wins the election, we expect China’s narrowly defined official budget deficit to be widened to 3.5% of GDP (CNY 4.8tn) in 2025 from an effective 3.4% (CNY 4.5tn) this year. In case of a Trump win, another CNY 1-2tn of spending (c.1% of GDP) will likely be added to offset a potential increase in US tariffs on imports from China.”

• Former president Donald Trump wins Pennsylvania, according to the Associated Press, putting him short of three electoral votes for the presidency.
• Trump could take the election by just winning in Alaska or any other swing state.
• Trump's likely victory favours the so-called Trump trades, with the US Dollar and Bitcoin soaring.

Former US president Donald Trump is about to officially win the 2024 US presidential election. The Republican candidate has won in Pennsylvania, a key swing state, according to the Associated Press. Trump's win in this key state, as well as his lead in others, puts him on the verge of victory.

Trump had already won in other key states such as Georgia and North Carolina. The Republican nominee has secured 267 electoral votes, just three under the 270 electoral votes needed to become president. Kamala Harris, meanwhile, has secured 224 electoral votes.

Trump holds a commanding lead in other key states such as Michigan, Wisconsin, Nevada and Arizona. Winning all of them would result on a clean sweep of all key swing states. In any case, securing Alaska – a Republican stronghold – would be enough for Trump to win.

Some estimates also suggest that Trump could win in the popular vote, the first Republican candidate to do so in 20 years.

"This is a magnificent victory for the American people," Trump said in his first speech after almost securing the victory. "America has given us an unprecedented mandate," he added.

The US Dollar soars more than 1.5% on Wednesday, according to the DXY US Dollar Index. Meanwhile, Bitcoin jumps 6% and has reached a new all-time high. Meanwhile, Gold retreats further from recent highs, falling 0.6% on Wednesday.

(developing story, please refresh for updates)

Donald Trump delivers a speech at the Palm Beach Convention Center after he is widely projected to win the presidency.

Trump speech key takeaways

"We're going to help our country heal."

"We made history for a reason tonight, it's a political victory."

"I thank the American people for honor of being elected."

"I will fight for every citizen."

"This is a magnificent victory for the American people."

"We are now winning in Michigan, Arizona, Nevada, Alaska."

"America has given us an unprecedented mandate."

"We've taken back control of Senate."

"Gonna have to seal up borders."

"Want people to come back in but they have to come in legally."

"We're gonna be paying down debt, reducing taxes."

"China doesn't have what we have."

"We want to have borders, security."

"We want a strong, powerful military."

• NZD/USD may approach the lower boundary of the descending channel pattern near 0.5900.
• An upward correction would be indicated if the 14-day RSI breaks below the 30 mark.
• The nine-day EMA at 0.5979 level may act as the immediate resistance.

The NZD/USD pair loses ground to near 0.5930 during Wednesday's early European session. Daily chart analysis indicates a bearish bias, with the pair positioning within a descending channel.

However, the 14-day Relative Strength Index (RSI), a key momentum indicator, approaches the 30 level. A break below the 30 mark would indicate an oversold situation for the NZD/USD pair and an upward correction in the near future.

Adding to this outlook, the nine-day Exponential Moving Average (EMA) remains below the 14-day EMA, suggesting a weakness in the trend for the NZD/USD pair.

On the downside, NZD/USD may find its support around the lower boundary of the descending channel near 0.5910, followed by the psychological level of 0.5900 level.

A break below the latter could put downward pressure on the NZD/USD pair to navigate the region around the throwback support at the 0.5850 level.

On the resistance side, the NZD/USD may test the nine-day EMA at 0.5977 level, followed by the upper boundary of the descending channel near the 14-day EMA at 0.5999 level.

A breakthrough above the descending channel pattern would cause the emergence of the bullish bias and support the NZD/USD pair to explore the region around the psychological level of 0.6100.

NZD/USD: Daily Chart

• The Pound Sterling plunges against the US Dollar as Trump wins in North Carolina and leads in other swing states.
• Trump’s victory could significantly dent the UK’s economic growth.
• Investors see the Fed and the BoE cutting interest rates by 25 bps on Thursday.

The Pound Sterling (GBP) plummets to near 1.2850 against the US Dollar (USD) in early London trading hours on Wednesday. The GBP/USD pair faces an intense sell-off as investors rush to the so-called ‘Trump trades’ after various exit polls showed Republican candidate Donald Trump having a clear lead over Democratic rival Kamala Harris in the US presidential election.

According to the Associated Press, Trump has been announced as a winner in key swing state North Carolina and is also leading in the other six swing states: Pennsylvania, Michigan, Georgia, Arizona, Nevada and Wisconsin.

The impact of Trump leading election polls is clearly visible in risk-sensitive currencies, which are significantly down against the US Dollar. Meanwhile, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, posts a fresh four-month high at around 105.30.

Risk-perceived currencies have been hit hard as investors expect higher import tariffs in Trump’s administration, which will significantly impact exports of United States (US) close trading partners. Trump also promised lower corporate taxes if he wins, which would allow the Federal Reserve (Fed) to maintain a hawkish interest rate guidance.

Apart from the US presidential election, investors will also focus on the Fed’s monetary policy meeting, scheduled on Thursday. The Fed is widely anticipated to cut interest rates by 25 basis points (bps) to 4.50%-4.75%. Therefore, investors will pay close attention to the Fed’s commentary on interest rate guidance. 

Daily digest market movers: Pound Sterling is sidelined ahead of BoE meeting

• Except against the US Dollar, the Pound Sterling exhibits a mixed performance compared to its major peers on Wednesday. The British currency is expected to trade sideways, with investors focusing on the Bank of England’s (BoE) interest rate decision, which will be announced on Thursday. The BoE is expected to cut interest rates by 25 bps to 4.75%. This would be the second interest rate cut this year. The BoE started its policy-easing cycle with a usual rate cut of 25 bps on August 1.
• Investors expect the BoE rate cut decision to be a 7-0 vote split, while the other two Monetary Policy Committee (MPC) members are expected to support leaving interest rates unchanged at their current levels.
• Investors will pay close attention to BoE Governor Andrew Bailey’s press conference to know the impact of the United Kingdom (UK) budget for FY2025 on the inflation outlook and the monetary policy action in December. There would also be some questions about the impact of Trump’s victory on the UK economy if he wins or remains in the lead by then.
• According to economists at the National Institute of Economic and Social Research (NIESR), the UK economic growth would be just 0.4% if Trump’s tariff plans were implemented. The agency also sees a slower Gross Domestic Product (GDP) growth at 1.2% next year and 1.1% in 2026, even without Trump’s tariffs, Reuters reported.

Technical Analysis: Pound Sterling dives to near 200-day EMA

The Pound Sterling dives to an 11-week low near 1.2850 against the US Dollar, which aligns with the 200-day Exponential Moving Average (EMA). The GBP/USD pair faced significant offers after a mean-reversion move to near the 50-day Exponential Moving Average (EMA), which trades around 1.3000.

The Cable has also delivered a Rising Channel breakdown on a daily timeframe, suggesting that a bearish reversal has been triggered.

The 14-day Relative Strength Index (RSI) falls back below 40.00, suggesting that the bearish momentum has resumed.

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 psychological figure of 1.3000.

Germany’s Factory Orders rebounded in September, according to the official data published by the Federal Statistics Office on Monday, suggesting that the German manufacturing sector recovery is back on track.

Over the month, contracts for goods ‘Made in Germany’ jumped by 4.2% in September after the 5.4% revised slump reported in August. Data beat the estimates of a 1.5% increase.

Germany’s Industrial Orders rose 1.0% in the year through September, as against the previous fall of 3.4.

FX implications

The Euro has found some support from the strong German data, as the EUR/USD trims losses to trade near 1.0740, as of writing. The pair is still down 1.75% on the day due to a potential Republican nominee Donald Trump's presidency.

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

The US Dollar (USD) gathers strength early Wednesday as markets react to US presidential election results, with the USD trading at its highest level since early July above 105.00. The US economic calendar will not feature any high-tier data releases and investors will continue to pay close attention to headlines surrounding the election outcome in key battleground states.

Donald Trump is projected to retake key battleground states that he narrowly lost in 2020. Almost every new major news outlet has called Georgia and North Carolina for Donald Trump. Just recently, Fox News has called Pennsylvania and Wisconsin for also Donald Trump. According to Decision Desk HQ, Trump is on track to become the 47th President of the United States. Furthermore, Republicans are projected to take the majority of the House after securing the Senate.

Source: Decision Desk HQ

In the meantime, the benchmark 10-year US Treasury bond yield is up more than 3% on the day above 4.4% and US stock index futures gain between 1.5% and 1.7%.

EUR/USD stays under heavy bearish pressure and loses nearly 2% on the day below 1.0750 in the early European session. Eurostat will publish Producer Price Index (PPI) data for September later in the session. European Central Bank (ECB) President Christine Lagarde is scheduled to deliver a speech at 14:00 GMT.

GBP/USD declines sharply on Wednesday and trades below 1.2900, pressured by impressive USD strength.

USD/JPY gathers bullish momentum and trades at its highest level since late July above 154.00.

Gold turns south after posting small daily gains on Tuesday and falls toward $2,700, dragged by the rallying US Treasury bond yields.

AUD/USD stays on the back foot and loses nearly 1.5% on the day, trading slightly below 0.6550. Similarly, NZD/USD was last seen losing 1.4% at 0.5930.

• USD/CAD strengthens to around 1.3930 in Wednesday’s early European session, adding 0.72% on the day. 
• The positive view of the pair prevails above the 100-day EMA and bullish RSI indicator. 
• The first upside barrier emerges at 1.3972; the initial contention level is located at 1.3836. 

The USD/CAD pair gathers strength to near 1.3930 during the early European session on Wednesday. The US Dollar (USD) rises across the board on the day as Trump trades continue to gain momentum after the polls showed Republican candidate Donald Trump ahead of Democratic candidate Kamala Harris in the US presidential election.

According to the daily chart, USD/CAD keeps a bullish vibe at present as the price is well-supported above the key 100-period Exponential Moving Average (EMA). Furthermore, the upward momentum is reinforced by the 14-day Relative Strength Index (RSI), which stands above the midline near 64.45, indicating that further upside cannot be ruled out in the near term. 

Any follow-through buying above the upper boundary of the Bollinger Band at 1.3972 could still lift USD/CAD back up to the 1.4000 psychological mark. A decisive break above this level could attract some buyers to 1.4140, the weekly high of May 11. 

On the flip side, the initial support level for the pair is seen at 1.3836, the low of November 5. Extended losses could pave the way to 1.3750, the low of October 16. The key contention level to watch is the 1.3700-1.3695 zone, representing the round figure and the 100-day EMA.  

USD/CAD daily chart

FX option expiries for Nov 6 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

EUR/USD: EUR amounts

• 1.0650 3.9b
• 1.0725 1.5b
• 1.0750 900m
• 1.0800 2.4b
• 1.0880 1.2b
• 1.0850 2b

USD/JPY: USD amounts                     

• 153.50 729m

USD/CHF: USD amounts     

• 0.8475 776m
• 0.8700 1.4b

AUD/USD: AUD amounts

• 0.6475 689m
• 0.6510 729m
• 0.6525 817m
• 0.6675 929m

USD/CAD: USD amounts       

• 1.3750 904m
• 1.3800 555m
• 1.3875 420m

EUR/GBP: EUR amounts        

• 0.8390 448m

Republican nominee Donald Trump is leading the US presidential race, most likely to become the 47^th president, leading Democratic nominee Kamala Harris in most of the battlegrounds after taking the must-win swing state of North Carolina. The resurgence of Trump trades has supported the renewed upside in the US Dollar (USD) and global stocks.

The current electoral vote tally is 227 for Trump and 189 for Harris, with the former US President taking hold of the swing states - Arizona, Georgia, Michigan, Pennsylvania and Wisconsin. 

Meanwhile, Fox News called Republicans in control of the US Senate yet again. Republicans won a key Senate seat in Ohio, with Trump-endorsed nominee Bernie Moreno projected to defeat Democratic Sen. Sherrod Brown, according to CNN News, flipping yet another seat for the (Grand Old Party) GOP.

The main focus is on the control of the House. If Democrats take the House majority, it could be a ‘divided government, causing policy gridlock for the likely Trump administration. Democrats need to flip just four seats to win control of the lower chamber

However, it appears that Republicans are still defending the control of the House by a narrow majority.

Market reaction

The US Dollar is consolidating the latest upswing against its major rivals. At the press time, the US Dollar Index (DXY) is trading at around 104.90, still adding 1.40% on the day.

• EUR/JPY faces downward pressure following hawkish meeting minutes from BoJ.
• BoJ Meeting Minutes showed that members were largely in agreement on continuing to raise interest rates.
• Traders await PMI data for Germany and the Eurozone and speeches from ECB officials on Wednesday.

EUR/JPY maintains its position near 165.50 during the Asian trading hours on Wednesday as the Japanese Yen (JPY) gained support from hawkish minutes of the Bank of Japan's (BoJ) most recent meeting. The minutes showed that board members were largely in agreement on continuing to raise interest rates, as inflation and economic conditions align with the central bank’s objectives.

The Jibun Bank Japan Services Business Activity Index fell to 49.7 in October, down from 53.1 in September, signaling a decline in services activity. This marks the first contraction since June, although it was marginal, with companies reporting slower sales.

The positive Eurozone Gross Domestic Product (GDP) data led traders to scale back expectations for a larger-than-usual interest rate cut at the December policy meeting. However, markets still anticipate the European Central Bank (ECB) will reduce the Deposit Facility Rate by the usual 25 basis points (bps) in December.

PMI data for Germany and the Eurozone is set to be released on Wednesday, and traders will shift their focus to speeches from European Central Bank (ECB) President Christine Lagarde and Vice President Luis de Guindos later in the day.

Regarding the US presidential election, early exit poll results from Wisconsin indicate a lead for Republican candidate Donald Trump, with 56% of the vote compared to 42.5%, based on 7.5% of expected votes counted. In North Carolina, exit polls show a tight race between Trump and Kamala Harris, with 50% of the votes counted. In Michigan, with 12% of votes counted, Harris' lead has shrunk from 61% to 53%.

• EUR/GBP tumbles to near 0.8345 in Wednesday’s early European session.
• The BoE is expected to cut interest rates at its November meeting on Thursday. 
• Diminishing odds for larger ECB rate cuts might help limit the EUR’s losses. 

The EUR/GBP cross extends its decline to around 0.8345 during the early European session on Wednesday. The rising expectation that the Bank of England (BoE) will cut rates slowly supports the Pound Sterling (GBP) and weighs on the cross. The BoE interest rate decision will be in the spotlight on Thursday. 

The UK central bank is anticipated to reduce its interest rate from 5.0% to 4.75% at its Monetary Policy Committee meeting on Thursday. The markets believe the heightened UK government spending may be inflationary, triggering the BoE to slow the expected path of rate cuts. 

“Markets have already tempered expectations [and are] now forecasting two or three rate cuts in 2025, down from earlier projections of four or five,” said Daniela Sabin Hathorn, senior market analyst at Capital.com. “The BoE is now expected to cut rates less aggressively than the Fed and the ECB,” Hathorn added in a note.

The European Central Bank (ECB) has already reduced rates three times already this year as inflation risks in the Eurozone ease faster than expected. The central bank lowered the deposit rate by a further 25 basis points (bps) at its October meeting. The decision came after inflation in the euro area cooled to 1.8% in September, below the ECB’s 2% target.

Nonetheless, the stronger-than-expected Eurozone Gross Domestic Product (GDP) could trim the ECB rate cut expectation, which caps the downside for the shared currency. The ECB's President Christine Lagarde and Vice President Luis de Guindos are scheduled to speak later on Wednesday. Investors will take more cues from the speeches. Less dovish remarks could lift the EUR against the GBP for the time being. 

• USD/CHF jumps to a three-month peak on Wednesday amid broad-based USD strength.
• The Trump trade, smaller Fed rate cut bets and surging US bond yields benefit the buck.
• The risk-on mood undermines the safe-haven CHF and further lends support to the pair.

The USD/CHF pair catches aggressive bids on Wednesday and spikes to its highest level since early August, around the 0.8755 region during the Asian session. Spot prices, however, retreat a few pips in the last hour and currently trade just above the 0.8700 mark, still up 0.90% for the day.

The US Dollar (USD) strengthens across the board and spikes to over a four-month peak in reaction to initial US election exit polls, which indicated an early lead for former President Donald Trump in key swing states. Meanwhile, the Trump optimism triggers a fresh wave of risk-on trade across the global equity markets and undermines the safe-haven Swiss Franc, which, in turn, provides an additional boost to the USD/CHF pair. 

Meanwhile, speculations that a Republican sweep could see the launch of Trump's potentially inflation-generating tariffs, along with deficit-spending concerns and bets for a less aggressive easing by the Federal Reserve (Fed), continue to push the US bond yields higher. In fact, the yield on the benchmark 10-year US government bond surges over 15 points at 4.44%, hitting its highest level since July 2 and favors the USD bulls. 

That said, expectations for a further spike in volatility across the financial markets act as a headwind for the buck and hold back traders from positioning for any further appreciating move for the USD/CHF pair. Nevertheless, the fundamental backdrop suggests that the path of least resistance for spot prices remains to the upside. Hence, any subsequent decline might still be seen as a buying opportunity and remain limited.

• NZD/USD falls as US Dollar receives support from Trump trade optimism.
• Exit polls indicate growing support for former President Trump’s bid to become the 47th President of the United States.
• New Zealand’s Unemployment Rate Q3 increased to 4.8% from 4.6% in the second quarter.

NZD/USD depreciates by more than 1% as the US Dollar (USD) rises due to a Trump trade rally sparked by the favorable results for the Republican candidate Donald Trump in the US presidential election. The pair trades around 0.5930 during the Asian hours on Wednesday.

As exit polls indicate growing support for former President Trump’s bid to become the 47th President of the United States (US), the market sentiment shifts in favor of the US Dollar, undermining the NZD/USD pair.

Early exit poll results from Wisconsin indicate a lead for Republican candidate Donald Trump, with 56% of the vote compared to 42.5%, based on 7.5% of expected votes counted. In North Carolina, exit polls show a tight race between Trump and Kamala Harris, with 50% of the votes counted. In Michigan, with 12% of votes counted, Harris' lead has shrunk from 61% to 53%.

Follow our live coverage: Trump or Harris? Who will be the 47th President of the US and how will markets react?

On Wednesday, Stats NZ released the Unemployment Rate for the third quarter (Q3) of New Zealand, which rose to 4.8% from 4.6% in the second quarter. This figure was below the market consensus of 5.0% for the period. The Employment Change rate declined by 0.5% quarter-on-quarter and by 0.8% year-on-year in Q3.

Additionally, the Reserve Bank of New Zealand decided to cut the Official Cash Rate (OCR) by 75 basis points (bps) as part of its easing cycle, which began in August. Markets are anticipating another 50 bps reduction at the final policy decision of the year on November 27, bringing the OCR down to 4.25%.

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

The price for Gold stood at 7,412.06 Indian Rupees (INR) per gram, down compared with the INR 7,424.86 it cost on Tuesday.

The price for Gold decreased to INR 86,452.76 per tola from INR 86,602.09 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.)

• EUR/USD plummets to a multi-month low as the USD rallies across the board on Trump enthusiasm.
• Surging US bond yields favors the USD bulls and support prospects for further decline for the major.
• Diminishing odds for more aggressive ECB rate cuts lend support to the Euro and limit further losses.

The EUR/USD pair comes under intense selling pressure on Wednesday and dives to its lowest level since early July, around the 1.0720-1.0715 region during the Asian session. Spot prices, however, manage to recover a few pips in the last hour and currently trade just above mid-1.0700s, still down 1.50% for the day.

The US Dollar (USD) catches aggressive bids and spikes to a four-month peak amid rising odds of a victory for former President Donald Trump, which, in turn, is seen weighing heavily on the EUR/USD pair. Meanwhile, a Republican sweep could see the launch of potentially inflation-generating tariffs. This, along with deficit-spending concerns and bets for a less aggressive easing by the Federal Reserve (Fed), pushes the US Treasury bond yields sharply higher and favors the USD bulls.

In fact, the yield on the benchmark 10-year US government bond surges over 15 points at 4.44%, hitting its highest level since July 2, and validates the near-term positive outlook for the Greenback. That said, the risk-on impulse – as depicted by a strong bullish sentiment across the global equity markets, holds back the USD bulls from placing fresh bets and helps limit further losses for the EUR/USD pair amid rising 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, could offer some support to the EUR/USD pair, though a sustained break and acceptance below the 1.0800 mark suggests that the path of least resistance for spot prices is to the downside.

Republican nominee Donald Trump is most likely to become the 47^th US president, according to the exit polls, as he leads in several major battlegrounds by a minor margin after taking more than 20 reliably red states. The Trump trade optimism is back in play, bolstering the US Dollar (USD) and global stocks.

The current electoral vote tally is 211 for Trump and 145 for Harris and the New York Times (NYT) needle puts Trump at 88% chance of winning the presidency.

The presidential race still remains too close a call in these swing states, as some states may take a couple of days to offer final results. 

Exit polls result in Wisconsin point to a Trump lead, as the former US president secures 51% of the votes to 48%, with 63% of the expected votes counted.  

However, human error and hoax bomb threats have held up vote counts at some polling stations in Wisconsin. In Milwaukee, election officials are recounting more than 30,000 absentee ballots because doors on the ballot tabulators were not properly sealed. The recount could delay results in Wisconsin, considered one of seven critical swing states.

North Carolina exit polls also show similar results, with 88% of votes counted

About 30% of votes were counted in Michigan and Trump sees a 51.6% lead to 46.7%.

Nebraska District 2 initial results show Harris leading, with 54.4% while the support for Trump stands at  38%, as 78% of the votes get counted.

Georgia, a key swing state, was among the first of those with available exit polls, showing a Trump victory. The state, which holds 16 electoral votes, shows Trump securing about 51.1% of the votes against Harris’ 48.2%, according to CBC News, with 90% of the expected votes counted.

Some media outlets have called North Carolina and Georgia for Trump already.

Preliminary results in Pennsylvania, the most closely watched swing state, shift in favor of Trump, per CBC News. With about 76% of the expected votes counted, Kamala now secures 48% vs. Trump’s 51.0%. The state holds 19 electoral votes.

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

Market reaction

The US Dollar has retraced some gains against its major rivals, with the US Dollar Index currently trading back under 105.00, still up 1.42% on the day.

Silver price depreciates as safe-haven metals face challenges over Trump trade rally.

Early exit polls indicate former President Donald Trump currently holds an edge over Vice President Kamala Harris.

Improved US Treasury yields contribute to the downward pressure on non-yielding Silver.

Silver price (XAG/USD) struggled to hold onto recent gains, trading around $32.10 per troy ounce during the Asian session on Wednesday. The dollar-denominated precious metal faces downward pressure from a stronger US Dollar (USD), which is likely linked to a rally sparked by the favorable results for the Republican candidate in the US presidential election.

As exit polls begin to show growing support for former President Donald Trump, the likelihood of him becoming the 47th president is increasing. This renewed optimism surrounding the "Trump trade" is lifting market sentiment, creating downward pressure on safe-haven assets like Silver.

Early exit poll results from Wisconsin indicate a lead for Republican candidate Donald Trump, with 56% of the vote compared to 42.5%, based on 7.5% of expected votes counted. In North Carolina, exit polls show a tight race between Trump and Kamala Harris, with 50% of the votes counted. In Michigan, with 12% of votes counted, Harris' lead has shrunk from 61% to 53%.

Moreover, initial results show Harris leading Trump 61% to 38%, with 46% of the votes tallied in Nebraska's District 2. Meanwhile, early exit polls from Georgia, one of the first states to report, show a slight edge for Trump. With 16 electoral votes up for grabs, preliminary data suggests Trump holds a 10% lead over Harris, although this is based on less than 1% of votes counted, according to The Washington Post.

Additionally, non-yielding assets like Silver are facing headwinds as US Treasury yields rise, with the 2-year and 10-year US Treasury bond yields at 4.23% and 4.34%, respectively, at the time of writing. Market attention is focused on the balance of power in Congress, as a sweep by either party could bring substantial changes to spending and tax policies, influencing broader market dynamics.

• AUD/JPY climbs to over a one-week low, albeit struggles to capitalize on the move. 
• The BoJ rate hike uncertainty, the risk-on mood weigh on the JPY and lend support.
• The RBA’s hawkish stance and the optimism over Chinese recovery benefit the AUD.

The AUD/JPY cross attracts follow-through buying for the second successive day on Wednesday and climbs to over a one-week high during the Asian session. Spot prices, however, struggle to build on the momentum beyond the 101.00 round figure and retreat to the lower end of the daily range, closer to a technically significant 200-day Simple Moving Average (SMA) in the last hour.

The Japanese Yen (JPY) continues with its relative underperformance in the wake of expectations that Japan's political landscape could make it difficult for the Bank of Japan (BoJ) to hike interest rates further. Apart from this, the risk-on impulse, triggered by the US election results indicating an early lead for former President Donald Trump, weighs heavily on the safe-haven JPY and provides an intraday boost to the AUD/JPY cross.

Meanwhile, Chinese PMIs released recently suggested that the big government stimulus push to bring growth back on track is helping improve business conditions. This, along with the Reserve Bank of Australia's (RBA) hawkish stance, offered additional support to the AUD/JPY cross. That said, BoJ meeting minutes left the door open for further policy tightening and cap any further appreciating move for the currency pair. 

From a technical perspective, the recent range-bound price action witnessed over the past month or so points to indecision among traders over the next leg of a directional move. This, along with the aforementioned mixed fundamental backdrop, makes it prudent to wait for strong follow-through buying before positioning for the resumption of the AUD/JPY pair's strong move-up from the September monthly swing low.

• The Indian Rupee remains under pressure near an all-time low in Wednesday’s Asian session. 
• Stronger USD and persistent foreign fund outflows continue to undermine the INR. 
• Investors brace for the US presidential election results on Wednesday. 

The Indian Rupee (INR) attracts some sellers to an all-time low on Wednesday, pressured by a rise in the US Dollar (USD) and weakness in Asian peers after the polls showed Republican candidate Donald Trump ahead of Democratic candidate Kamala Harris in the US presidential election. Furthermore, significant outflows from domestic stocks continue to weigh on the local currency. 

However, the downside risk for the INR might be limited by the routine actions taken by the Reserve Bank of India (RBI) to sell the USD to prevent significant depreciation in the Indian Rupee. Investors will closely monitor the outcome of the US election ahead of the US Federal Reserve (Fed) meeting on Thursday. Meanwhile, Trump trades continue to rally as his odds improve. Analysts expect that the victory of Donald Trump could push the USD higher.

Daily Digest Market Movers: Indian Rupee seems vulnerable amid US election updates

• "Dollar is doing well, U.S. yields are on the rise and U.S. equity futures are up. Traders are getting into Trump trades based on what the U.S. election results are so far," noted a Singapore-based hedge fund portfolio manager. 
• 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.
• The US ISM Services Purchasing Managers Index (PMI) rose to 56.0 in October from 54.9 in September and beating the estimation of 53.8. 
• The US S&P Global Services PMI came in at 55.0 in October, down from the previous reading and the consensus of 55.3.
• Financial markets are now pricing in nearly a 94% possibility of a quarter point reduction and a near 80% odds of a similar-sized move in December, according to CME's FedWatch tool.

Technical Analysis: USD/INR remains bullish in the longer term

The Indian Rupee weakens on the day. Technically, the strong bullish outlook of the USD/INR pair remains intact as the pair holds above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. Additionally, the 14-day Relative Strength Index (RSI) holds above the midline near 67.30, suggesting that the path of least resistance is to the upside. 

The key upside barrier for USD/INR emerges near the upper boundary of the ascending trend channel at84.25. Extended gains above the mentioned level could see a rally to 84.50, en route to the 85.00 psychological level.

In the bearish event, any follow-through selling below the lower limit of the trend channel near 84.05 could expose 83.79, the 100-day EMA. The next contention level is located at 83.46, the low of September 24. 

• Gold price ticks lower on Wednesday as the USD surges to a four-month high.
• The Trump trade is back in play following the initial US election exit poll results. 
• Expectations for a spike in volatility lend support to the safe-haven XAU/USD.

Gold price (XAU/USD) struggles to capitalize on the previous day's bounce from the $2,725-2,724 area, or a one-and-a-half week low and seesaws between tepid gains/minor losses during the Asian session on Wednesday. A strong pickup in the US Dollar (USD) demand, bolstered by exit polls indicating a lead for the Republican nominee Donald Trump in key swing states – acts as a headwind for the commodity. 

Apart from this, a sharp intraday surge in the US Treasury bond yields and the risk-on impulse turn out to be another factor keeping a lid on the non-yielding Gold price. That said, expectations for a further spike in volatility in the wake of the US election results hold back traders from placing aggressive bearish bets around the safe-haven precious metal, which, in turn, should help limit any meaningful downfall. 

Daily Digest Market Movers: Gold price bulls remain on the sidelines amid resurgent USD demand

• The US Dollar surged to a nearly four-month top in reaction to the US election exit polls, which suggest that the vote is moving in former President Donald Trump's direction.
• Georgia, a key swing state, was among the first of those with available exit polls, showing a Trump victory, and early exit poll results in Wisconsin also point to a Trump win.
• Preliminary results of the exit poll from Pennsylvania, one of the most closely watched swing states, appear in favor of Vice President Kamala Harris, according to CBC News.
• North Carolina exit polls show a close race while Nebraska District 2 initial results show Harris leading. CBC News called Indiana, Kentucky and West Virginia for Trump.
• Rising odds of Trump winning the election fuel speculation about the launch of potentially inflation-generating tariffs and push the US Treasury bond yields sharply higher. 
• The US election results clear out a major point of uncertainty for markets, triggering a fresh wave of risk-on trade and further contributing to capping the safe-haven Gold price.
• The downside for the XAU/USD, however, is cushioned as traders remain cautious in the wake of the expected spike in volatility across the global financial markets.
• Iran's plans for a retaliatory strike against Israel’s attack on its territory on October 26 continue to fuel worries about the risk of a further escalation of tensions in the Middle East.

Technical Outlook: Gold price traders await a breakout through a multi-day-old trading range

From a technical perspective, the $2,725-2,720 area might continue to act as immediate strong support, below which the Gold price could accelerate the slide towards testing sub-$2,700 levels. The latter represents the lower boundary of a short-term ascending trend channel extending from late July. A convincing break below should pave the way for an extension of the recent corrective pullback from the all-time peak touched last week and drag the XAU/USD toward the next relevant support near the $2,675 zone en route to the $2,657-2,655 region.

On the flip side, the $2,748-2,750 area now seems to have emerged as an immediate hurdle. The subsequent move up could lift the Gold price to the ascending trend-channel hurdle, currently pegged near the $2,780-2,785 region. This is closely followed by the $2,800 mark, which is likely to act as a key pivotal point. A sustained strength beyond will set the stage for the resumption of the prior well-established uptrend.

• GBP/USD loses ground due to increased Trump trade as exit polls favor the Republican Party.
• The prediction platforms indicate former President Donald Trump currently holds an edge over Vice President Kamala Harris.
• Traders will turn their attention to the interest rate decisions from both the Federal Reserve and the Bank of England on Thursday.

GBP/USD offers its recent gains registered in the previous session, trading around 1.2940 during the Asian hours on Wednesday. The pair depreciates as the US Dollar (USD) gains momentum on strengthening Trump trades as the voting favored Republican candidate Donald Trump in the US presidential election.

Polling data indicate a close race between Donald Trump and Kamala Harris, with Trump currently holding an edge. On Kalshi, Trump shows a strong 57% to 43% lead over Harris, while on Polymarket, the gap is slightly wider, with Trump at 60.7% and Harris at 39.5%. These figures reflect growing support for Trump as election day approaches, but the race remains competitive.

Early exit polls in Georgia, one of the first states with available data, indicate a tilt toward Republican presidential candidate Donald Trump. With 16 electoral votes at stake, preliminary results suggest Trump has about a 10% lead over Democratic candidate Kamala Harris, although this estimate is based on less than 1% of votes counted, according to The Washington Post.

Preliminary results from the Pennsylvania exit polls show a lead for Harris, according to CBC News. With approximately 8% of the expected votes counted, Kamala has secured a 71% majority. The state has 19 electoral votes at stake.

Follow our live coverage: Trump or Harris? Who will be the 47th President of the US and how will markets react?

Traders are closely watching the Federal Reserve's interest rate decision set for Thursday, with a widespread expectation of a 25 basis point cut. The CME FedWatch Tool shows a 96.4% probability of a quarter-point rate reduction at the Fed's November meeting, reflecting strong market anticipation of a modest cut.

On the GBP front, the Bank of England's (BoE) upcoming rate decision, also scheduled for Thursday, is expected to result in another quarter-point reduction. The BoE’s Monetary Policy Committee is anticipated to vote 7-2 in favor of lowering the main reference rate to 4.75% from the current 5.0%.

The conviction of the Republican nominee Donald Trump becoming the 47^th US president is growing stronger, according to the early exit polls, as polls closed in most states. The Trump trade optimism is back in play, bolstering the US Dollar (USD) and global stocks. However, nothing can be concluded as yet, as some states may take a couple of days to offer final results. 

Early exit polls results in Wisconsin point to a Trump win, as the former US president is leading with 56% of the votes to 42.5%, with 7.5% of the expected votes counted.  

North Carolina exit polls show a close race for Trump and Harris, with 50% of votes counted. However, Trump shows a minor lead.

About 12% of votes counted in Michigan, votes in favor of Harris have retraced from 61% to 53% so far.

Nebraska District 2 initial results show Harris leading with 61% to Trump’s 38%, as 46% of the votes get counted.

Georgia, a key swing state, was among the first of those with available exit polls, showing a Trump victory. The state, which holds 16 electoral votes, shows Trump securing about 53% of the votes against the Democratic nominee Kamala Harris, according to CBC News, with 70% of the expected votes counted.

Preliminary results in Pennsylvania, the most closely watched swing state, still appear in favor of Harris, according to CBC News. With about 22% of the expected votes counted, Kamala has secured 58% vs. Trump’s 41%. The state holds 19 electoral votes.

CBC News called Alabama, Arkansas, Florida, Indiana, Kentucky, Missouri, Oklahoma, North Dakota, South Dakota, South Carolina, Tennessee, Texas, West Virginia and Wyoming for Trump, while Harris will hold the reliably blue Delaware, Maryland, Massachusetts, Vermont and the District of Columbia.

The current electoral vote tally is 154 for Trump and 30 for Harris.

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

Market reaction

The US Dollar regains upside traction following the early exit polls from Wisconsin and Michigan. The US Dollar Index is currently trading at weekly highs near 104.60, up 1.17% on the day.

• EUR/USD softens to near 1.0805 in Wednesday’s Asian session, down 1.06% on the day. 
• Trump trades continue to strengthen as Trump is leading in the US presidential election. 
• The ECB’s large rate cut bets diminished after upbeat Eurozone Q3 GDP growth data. 

The EUR/USD pair falls to around 1.0805 during the Asian trading hours on Wednesday. The Greenback gains momentum as the voting favoredd Former US President Donald Trump in the US presidential election. 

Polls are closing in 15 states, including the battleground states of Arizona, Michigan and Wisconsin. Trump is doing better in rural areas, while Kamala Harris is doing better in the suburbs than Biden. Trump trades continue to strengthen, supporting the US Dollar (USD) against the Euro (EUR). 

Steve Englander, head of global G10 FX research and North America macro strategy at Standard Chartered Bank's New York branch, said, "Right now the mood seems to be going in favor of Trump," Englander said. "On the other hand for most of October and into the beginning of November the Trump trades were stronger dollar and higher yields,” added Englander. 

The US presidential election will be the key event for the USD dynamic this week. However, investors will shift their attention to the Federal Reserve’s (Fed) monetary policy decision, which will be announced on Thursday.

Across the pond, the upbeat Eurozone Gross Domestic Product (GDP) data prompted traders to pare bets supporting a larger-than-usual interest rate cut in the December policy meeting. The markets expect the ECB to cut the Deposit Facility Rate again in December by a usual size of 25 basis points (bps). Investors will keep an eye on the speeches from the ECB's President Christine Lagarde and Vice President Luis de Guindos later on Wednesday. 

• The US Dollar Index gains ground as early exit polls increase volatility in the financial markets.
• Georgia exit polls indicate that Trump holds a 10% lead over Harris, estimated with less than 1% of votes counted.
• Pennsylvania exit polls show a lead for Harris with about 8% of the expected votes counted.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against its six major peers, appreciates to near 104.20 during the Asian trading session on Wednesday. The US Dollar gains ground due to market caution ahead of the outcome of the US presidential election. Polling stations have now closed in over two dozen states, and early exit polls are starting to come in, increasing volatility in the financial markets.

Early exit polls in Georgia, one of the first states with available data, indicate a tilt toward Republican presidential candidate Donald Trump. With 16 electoral votes at stake, preliminary results suggest Trump has about a 10% lead over Democratic candidate Kamala Harris, although this estimate is based on less than 1% of votes counted, according to The Washington Post.

Preliminary results from the Pennsylvania exit polls show a lead for Harris, according to CBC News. With approximately 8% of the expected votes counted, Kamala has secured a 71% majority. The state has 19 electoral votes at stake.

Follow our live coverage: Trump or Harris? Who will be the 47th President of the US and how will markets react?

Improved US Treasury yields are bolstering the US Dollar, with the 2-year and 10-year yields on US Treasury bonds standing at 4.23% and 4.34%, respectively, at the time of writing. Traders remain cautious due to the tight race in the US presidential election. The market is closely watching the control of Congress, as a sweep by either party could lead to significant shifts in spending and tax policies.

On the monetary policy front, traders are focusing on the Federal Reserve's interest rate decision scheduled for Thursday, with a broad consensus anticipating a 25 basis point cut. According to the CME FedWatch Tool, there is a 96.4% probability that the Fed will lower rates by a quarter percentage point at its November meeting, signaling strong market expectations for a modest cut.

Regarding economic data, the US ISM Services Purchasing Managers Index rose to 56.0 in October, up from 54.9 in September, surpassing the forecast of 53.8. However, the S&P Global Services PMI registered at 55.0 in October, slightly below both the previous reading and the expected 55.3.

• USD/CAD catches aggressive bets and draws support from a combination of factors.
• The USD rallies across the board in reaction to Trump's early election lead.
• Retreating Oil prices, dovish BoC minutes undermine the CAD and support the pair. 

The USD/CAD pair rallies over 80 pips from a two-week low, around the 1.3820-1.3815 region touched during the Asian session on Wednesday, reversing the previous day's losses and snapping a two-day losing streak. Spot prices, however, struggle to build on the momentum and remain below the 1.3900 mark as investors assess the incoming US election exit polls. 

• Trump or Harris? Who will be the 47th President of the US and how will markets react?

The US Dollar (USD) surged across the board and shot to a one-week high after initial results indicated a lead for the Republican nominee Donald Trump in Georgia – a key swing state. Apart from this, a further pullback in Crude Oil prices from over a three-week top touched on Tuesday is seen undermining the commodity-linked Loonie and provides a goodish lift to the USD/CAD pair. 

The Canadian Dollar (CAD) is further weighed down by dovish Bank of Canada (BoC) October meeting minutes, showing that the governing council felt upside pressures on inflation will continue to decline and that the monetary policy need not be as restrictive. This keeps the door open for more aggressive policy easing by the Canadian central bank and favors the USD/CAD bulls. 

That said, preliminary results of the Pennsylvania exit poll turn out to be a mixed bag for Trump and Vice President Kamala Harris. This, in turn, keeps a lid on any further USD appreciation and acts as a headwind for the USD/CAD pair. Volatility in financial markets is expected to remain elevated on the back of the US election results, warranting some caution before placing aggressive directional bets.

• WTI plunges to near $71.35 in Wednesday’s Asian session. 
• The stronger Greenback exerts some selling pressure on the USD-denominated Oil price. 
• Investors await the outcome of the US presidential election as polls were closing in the US. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $71.35 on Wednesday. The WTI price edges lower as the US presidential election polls were closing in the United States.

According to CNN, Former US President Donald Trump will win the key race of Florida, while Kamala Harris picks up Massachusetts and Maryland. Harris and Trump each need at least 270 electoral votes to win the presidency.

Meanwhile, the US Dollar (USD) rises to 104.25 versus a basket of other currencies as Trump trades continue to rally as Trump odds improve. A stronger Greenback makes oil more expensive in other countries.

On Sunday, a larger group called OPEC+, consisting of OPEC members plus other oil-producing countries, agreed to extend their oil production cut to 2.2 million barrels per day (bpd) until the end of December 2024. The countries also reiterated their commitment to “achieve full conformity” with their production targets and to compensate for any overproduction by September 2025.

The American Petroleum Institute (API) weekly report showed crude stocks rose last week. Crude oil stockpiles in the United States for the week ending November 1, increased by 3.132 million barrels, compared to a decline of 0.573 million barrels in the previous week. The market consensus estimated that stocks would increase by 1.8 million barrels.

• Gold price edges lower on Wednesday in reaction to the initial US election exit polls.
• Improving the odds of a Trump victory boosts the USD and weighs on the XAU/USD.
• A sharp rise in the US bond yields further undermine the non-yielding yellow metal.

Gold price (XAU/USD) struggles to capitalize on the previous day's bounce from the $2,725-2,724 area, or a one-and-half-week low and attracts fresh sellers during the Asian session on Wednesday. The commodity currently trades around the $2,740 level and is weighed down by a strong pickup in the US Dollar (USD) demand.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, spikes to a one-week high after initial exit polls indicated an early lead in key swing states for the Republican nominee Donald Trump. Moreover, speculations about the launch of Trump's potentially inflation-generating tariffs, along with deficit-spending concerns, triggered a sharp rise in the US Treasury bond yields. This turns out to be another factor underpinning the Greenback and exerting some pressure on the non-yielding Gold price. 

As polls continue to hit the wires, expectations of volatile swings across the global financial markets offer some support to the safe-haven XAU/USD and help limit the downside. Hence, it will be prudent to wait for strong follow-through selling before traders start positioning for an extension of the precious metal's recent pullback from the vicinity of the $2,800 mark, or the record high touched last Thursday.

A tight 2024 United States presidential election is seen leaning in favor of Republican nominee Donald Trump. Polling stations are now closed in more than two dozen states, and early exit polls are trickling, ramping up the volatility across the financial markets. However, nothing can be concluded as yet, as some states may take a couple of days to offer final results. 

Georgia, a key swing state, is among the first of those with available exit polls to show a Trump victory. The state, which holds 16 electoral votes, shows Trump securing about 55% of the votes against Democratic nominee Kamala Harris, according to CBC News, with 52% of the expected votes counted.

Polls in most of Pennsylvania, one of the most closely watched swing states, as well as 16 other states, are now closed. Preliminary results of the Pennsylvania exit poll appear in favor of Harris, according to CBC News. With about 8% of the expected votes counted, Kamala has secured a 71% majority. The state holds 19 electoral votes.

North Carolina exit polls show a close race for Trump and Harris, with 10% of votes counted. However, Trump shows a minor lead, per CBC News.

About 4% of votes counted in Michigan, Kamala is leading with 61% so far.

CBC News called Indiana, Kentucky and West Virginia for Donald Trump; and Vermont for Kamala Harris. The current electoral vote tally is 23 for Trump and three for Harris so far. BBC News said Trump takes Florida.

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

Market reaction

The US Dollar seems to have paused its upswing following the early exit polls from Pennsylvania. The US Dollar Index is currently trading at around 104.20, up 0.76% on the day.

• The Australian Dollar depreciates as traders adopt caution ahead of the results of the US presidential election.
• The Aussie Dollar could regain momentum as RBA Governor Michele Bullock reaffirmed a hawkish stance on Tuesday.
• Georgia exit polls indicate that Trump holds a 10% lead over Harris, estimated with less than 1% of votes counted.

The Australian Dollar (AUD) retraces its recent gains against the US Dollar (USD) on Wednesday as market anticipation builds ahead of the US presidential election outcome. Traders are also gearing up for the US Federal Reserve’s (Fed) policy announcement on Thursday.

The Aussie Dollar strengthened after the Reserve Bank of Australia (RBA) decided to hold the Official Cash Rate (OCR) steady at 4.35% on Tuesday, marking its eighth consecutive pause. RBA Governor Michele Bullock reiterated a hawkish stance, emphasizing the need for restrictive monetary policy given persistent inflation risks and a strong labor market.

Additionally, Australia’s latest Purchasing Managers Index (PMI) data indicated a positive shift in private sector activity in October. Growth in the services sector helped offset a continued decline in manufacturing.

Daily Digest Market Movers: Australian Dollar depreciates amid market caution ahead of US election results

• Georgia, one of the early states with available exit polls, shows a tilt toward Republican presidential candidate Donald Trump. With its 16 electoral votes, the initial data suggests Trump has roughly a 10% lead over Democratic candidate Kamala Harris, although this estimate is based on less than 1% of the votes counted, as reported by The Washington Post. This early lead suggests momentum for Trump, but with only a small fraction of votes tallied, the final outcome in Georgia remains uncertain.
• Polling data indicates a close race between Donald Trump and Kamala Harris, with Trump currently holding an edge. On Kalshi, Trump shows a strong 57% to 43% lead over Harris, while on Polymarket, the gap is slightly wider, with Trump at 60.7% and Harris at 39.5%. These figures reflect growing support for Trump as election day approaches, but the race remains competitive.
• Attention will be focused on the Federal Reserve's interest rate decision on Thursday, with markets broadly anticipating a 25 basis point cut. The CME FedWatch Tool currently shows a 96.4% probability that the Fed will lower rates by a quarter percentage point at its November meeting, reflecting strong market consensus for a modest cut this week.
• The US ISM Services Purchasing Managers Index increased to 56.0 in October, up from 54.9 in September, exceeding the forecast of 53.8. In contrast, the S&P Global Services PMI registered at 55.0 in October, slightly below both the prior reading and the expected 55.3.
• Australia's Judo Bank Services PMI improved to 51.0 in October from 50.6 in the previous reading, above the market consensus of 50.6. The Composite PMI climbed to 50.2 in October versus 49.8 prior. Caixin China Services PMI also rose to 52.0 in October from 50.3 in September.
• 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.

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

The AUD/USD pair trades near 0.6590 on Wednesday, with technical indicators on the daily chart suggesting a potential continuation of the bearish trend. The pair has slipped below the nine- and 14-day Exponential Moving Averages (EMAs), signaling downward momentum. Additionally, the 14-day Relative Strength Index (RSI) remains below the 50 mark, further supporting a bearish outlook for the pair.

For the AUD/USD pair, immediate support lies near the three-month low at 0.6536. A break below this level could lead the pair toward the critical psychological support at 0.6500.

On the upside, the pair could face resistance at the nine-day EMA at 0.6603, with additional resistance at the 14-day EMA at 0.6620. A breakout above these levels could signal strengthening momentum, potentially targeting the key psychological level of 0.6700.

AUD/USD: Daily Chart

• The Japanese Yen fails to capitalize on the hawkish BoJ minutes-led modest gains.  
• The BoJ rate-hike uncertainty and the risk-on impulse weigh heavily on the JPY.
• The US election results trigger a sharp USD rally and push the USD/JPY pair higher.

The Japanese Yen (JPY) touches a two-week high against its American counterpart during the Asian session on Wednesday after Bank of Japan (BoJ) minutes showed that the central bank will continue to hike interest rates if economic and price forecasts meet. Investors, however, seem convinced that Japan's political landscape could make it difficult for the BoJ to tighten its monetary policy further. Apart from this, a generally positive risk tone undermines the safe-haven JPY. 

This, along with the emergence of strong US Dollar (USD) buying, bolstered by initial exit polls showing that the scale leans toward former President Donald Trump, triggers a goodish intraday recovery of nearly 150 pips for the USD/JPY pair. As polls continue to hit the wires, markets are expected to react sharply one way or the other. This, in turn, warrants some caution for aggressive traders and before positioning for a firm near-term direction for the currency pair. 

Daily Digest Market Movers: Japanese Yen is pressured by resurgent USD demand

• The minutes of the September Bank of Japan policy meeting showed that the central bank plans gradual policy rate increases, though it remains cautious about overseas economic uncertainties, especially from the US.
• This comes on top of BoJ Governor Kazuo Ueda's hawkish remarks last week and keeps the door open for additional rate hikes, which, in turn, provides a modest lift to the Japanese Yen during the Asian session. 
• The initial market reaction, however, turns out to be short-lived and fades rather quickly amid doubts over the BoJ's ability to tighten its monetary policy further in the wake of the political uncertainty in Japan.
• The US Dollar rallies across the board after exit polls indicate an early lead in Georgia (swing state) for the Republican nominee Donald Trump, triggering a sharp surge of nearly 150 pips for the USD/JPY pair. 
• Rising odds of Trump winning the election fuel speculations about the launch of potentially inflation-generating tariffs, which, along with deficit-spending concerns, push the US Treasury bond yields sharply higher. 
• The yield on the benchmark 10-year US government bond spikes to its highest level since July, contributing to the strong bid tone surrounding the USD and driving flows away from the lower-yielding JPY.

Technical Outlook: USD/JPY could aim to challenge the multi-month top, around 153.85-153.90 area

From a technical perspective, sustained strength beyond the 153.00 round figure could 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. Some follow-through buying 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. 

On the flip side, the 152.30 area now seems to protect the immediate downside ahead of the 152.00 mark and the Asian session low, around the 151.30-151.25 region. This is followed by the 151.00 round figure, below which the USD/JPY pair could slide towards the 100-day Simple Moving Average (SMA) resistance breakpoint, now turned support, around the 150.25 region. Some follow-through selling, leading to a break below the 150.00 psychological mark, will shift the near-term bias in favor of bearish traders and pave the way for deeper losses.

• NZD/USD faces some selling pressure to near 0.5970 in Wednesday’s Asian session, down 0.41% on the day. 
• The USD edges higher as Trump trades continue to rally.
• New Zealand’s Unemployment Rate climbed to 4.8% in Q3 from 4.6% in Q2. 

The NZD/USD pair attracts some sellers to around 0.5970 on Wednesday during the early Asian session. The US Dollar (USD) strengthens across the board as Trump trades climb. Investors will closely monitor the outcome of the US presidential election ahead of the US Federal Reserve (Fed) meeting.

Georgia is among the first states with available exit polls, indicating a favorable outcome for Trump. According to the Washington Post, Trump won around 10% more votes than Harris in the state, which has 16 electoral votes. Trump trades continue to rally as his odds improve. Analysts expect that the victory of Donald Trump could push the USD higher. Trump’s proposals to hike tariffs against major US trading partners would result in a stronger Greenback.

On the Kiwi front, data released by Statistics New Zealand on Wednesday showed that the country’s Unemployment Rate in the third quarter (Q3) climbed to 4.8% from 4.6% in the second quarter. The figure was below the market consensus of 5.0% in the reported period.

New Zealand’s economy contracted in the second quarter and is estimated to have shrunk further in the third quarter, triggering the Reserve Bank of New Zealand (RBNZ) to continue cutting interest rates to revive growth. The New Zealand central bank decided to cut the Official Cash Rate (OCR) by 75 basis points (bps) since it began an easing cycle in August. The markets expect another 50 bps cut at the final policy decision of the year on November 27, which would take the OCR to 4.25%.

A historical United States presidential election is about to come to an end. Polling locations have begun closing, and initial exit polls will start hitting the wires, and triggering sharp reactions across financial boards one way or the other. It is worth remembering, however, nothing will be set and done, as some states may take a couple of days to offer final results. 

Whether former President Donald Trump or current Vice-President Kamala Harris will become the next US President will likely depend on what happens in the seven swing states. 

Georgia is among the first of those with available exit polls, showing that the scale leans toward Trump's side. The state, which holds 16 electoral votes, shows Trump received roughly 10% more votes than Harris, with less than 1% votes counted, according to the Washington Post. The advantage seems slimmer according to other researchers, but Trump also leads.

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

Market reaction

The US Dollar is up as an immediate reaction to the news. The US Dollar Index changed course and currently hovers around 103.60 after bottoming at  103.34 on Tuesday.

According to the Bank of Canada's (BoC) minutes from the October 2024 meeting that was released Wednesday, the governing council felt upside pressures on inflation will continue to decline, so the monetary policy did not need to be as restrictive. 

Key quotes

Market reaction to the BoC Minutes 

At the time of writing, USD/CAD was up 0.03% on the day at 1.3840.  

The Bank of Japan (BoJ) board members shared their views on the monetary policy outlook on Wednesday, per the BoJ Minutes of the September meeting.  

Key quotes

Market reaction to the BoJ Minutes

At the time of writing, USD/JPY was up 0.03% on the day at 151.56.