FX markets appear to be positioning for a Trump victory in subsequent month’s US presidential election. October appears to have been a superb month for Donald Trump in opinion polls and the US Greenback (USD) is bid throughout the board. Curiously within the week to final Tuesday (fifteenth) speculators and specifically asset managers purchased the USD closely towards the euro, but in addition towards the Canadian greenback. Canadian greenback and Mexican peso wouldn’t have as straightforward a experience as they did again in 2018/19 if Trump was re-relected, ING’s FX analyst Chris Turner notes.
USD is rallying broadly
“It’s with US elections looming giant that FX markets this week face the problem of geopolitics. The IMF conferences in Washington are extra a discussion board for central bankers to share their newest views (and lots of central financial institution governors will probably be talking), however we even have Russia internet hosting a BRICS summit and no finish in sight for Center East rigidity. Geopolitics within the driving seat is evidenced by gold pushing above $2700/oz regardless that the USD is rallying broadly.”
“It’s arduous to see this dynamic altering considerably over the subsequent couple of weeks. On Wednesday, the Federal Reserve does launch its Beige E book report forward of the subsequent FOMC assembly on 7 November. Many consider the mushy exhibiting of the prior Beige E book launch prompted the FOMC to begin with a 50bp reduce in September. This launch might be seen as the largest risk to the USD this week. But, US consumption and the labour market have held up not too long ago, and there’s no assure that this week’s Beige E book launch will push rate of interest markets into pricing 50bp of Fed easing this 12 months in comparison with present pricing of simply 43bp.”
“The USD has come fairly a great distance in a brief area of time. However except the Beige E book surprises on the draw back or Thursday’s European PMIs miraculously shock on the upside, evidently DXY will most likely keep bid within the prime finish of a 103-104 vary.”
