US Elections Next
Traders are bracing for heavy cross-market volatility this week with the US presidential elections tomorrow, the FOMC on Wednesday and the BOE on Thursday. The US Dollar is looking a little softer across early European trading on Monday. In recent sessions we’ve seen a greater degree of uncertainty creeping in with traders scaling back expectations of a Trump win. The return of the ‘Trump trade’ dynamic over October saw USD firmly higher while commodities and EMFX came under pressure. Now, just 24 hrs out from the election expectations look evenly split between the two candidates with many polls showing them neck-and-neck.
USD Risks
Given the rally we’ve seen in USD across recent weeks, there is room for a sharp short-squeeze in coming days if Harris wins. On the other hand, a Trump win could revive USD buying. However, this will largely depend on the composition of Congress. A Republican sweep would be firmly Dollar bullish and should reignite the ‘Trump trade.’ If Trump wins but the Democrats win Congress, however, USD upside will likely be more limited.
FOMC Outlook
Focus will then turn to the FOMC later in the week. The Fed is widely expected to cut by .25%. However, the bigger focus will be on the bank’s forward guidance and whether it gives a clear signal that further easing is likely this year. On the back of the heavily weaker-than-forecast US payrolls number last week, the view has turned more dovish again.
Technical Views
DXY
The rally in DXY has stalled for now into the 104.05 level with risks evenly split into the elections tomorrow. Topside, the bear trend line, 105.97 and 107.25 will be next resistance to watch. Below, 102.46 and 100.83 are the key supports to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.