The performance since the weekend in G10 suggests there is both a liquidity component and more Trump hedges driving FX at the moment, ING’s FX analyst Francesco Pesole notes.
“The group of more liquid/less Trump-exposed currencies (USD, EUR, CHF and GBP) is outperforming those that are less liquid and more sensitive to protectionism (AUD, NZD, NOK and SEK). We suspect this dynamic will continue in the coming days.”
“On the US macro side, today’s release of September’s JOLTS job openings data can distract markets from election trades. The recent hawkish trend in the USD swap curve pricing can realistically be inverted only with evidence of a softening jobs market, meaning we would need to see job openings reversing the August jump from 7.7m to 8.0m. The consensus is for the series to flatten at 8.0m.”
“The calendar also includes the Conference Board Consumer Confidence index, which is expected to have inched higher in October, and September’s wholesale inventories. Failing to see the US macro story deteriorate this week can pave the way for further dollar gains on the back of US election hedges and broad-based deleveraging. We retain a dollar-positive bias, and wouldn’t be surprised to see DXY close to 105.0 on Election Day.”
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