Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Greenback at highs as “Red Sweep” nears
The US dollar kept pushing higher overnight, powered by the so-called “Trump trade”, even as US inflation was reported in line with expectations.
The USD index closed at the highest level since October 2023 overnight as the Republican Party neared a majority in the House of Representatives – a result that would produce a Red Sweep and potentially make executing Trump’s agenda of tariffs and tax cuts easier.
The latest count according to Bloomberg sees the Republicans with 217 seats in the House of Representatives – with 218 required for a majority.
The USD gained despite an October inflation report that was in line with expectations and maintained market expectations for a 25bps Fed cut in December – markets see an 83% chance for a cut (source: Bloomberg).
The Aussie and kiwi again led losses with the AUD/USD down 0.7% to three-month lows. The NZD/USD fell 0.8% to end at the lowest closing level since July.
The euro and British pound also fell, with EUR/USD down 0.6% and GBP/USD down 0.3%.
In Asia, the USD/JPY gained 0.6%, USD/SGD gained 0.3% but USD/CNY ended steady just below 7.2500.
Aussie at three-month lows ahead of jobs
Looking to today’s trading, Australia unemployment data will be released at 11:30 AEDT.
In October, we’re looking for a 25k gain in employment. In line with leading survey data and the sub-trend GDP growth observed during the first half of the year, we anticipate some deceleration in the upcoming months notwithstanding the recent extremely robust employment growth.
But in the upcoming quarters, we anticipate that immigration growth will slow back to normal levels, which should eventually have an impact on employment growth as well.
In October, we anticipate that the participation and unemployment rates will have stayed at 67.2% and 4.1%, respectively.
A near-term support zone above the 0.6476 August 78.6% retracement level is tentatively seen in AUD/USD pair.
Below, major support is seen near 0.6348 – a break of this level could trigger a substantial move lower towards 0.6170.
China activity data to drive CNY moves
Last in the week, China industrial production and retail sales will be released on 15 November at 1.00pm AEDT.
Amidst a probable resurgence in exports and enhanced production of industrial goods like steel, industrial production growth is anticipated to slightly increase from 5.4% in September to 5.6% in October.
Given that consumer mood, particularly in major cities, may have slightly improved as a result of the “bazooka” stimulus measures, we anticipate that retail sales growth will increase from 3.2% in September to 3.5% in October.
Technically speaking, USD/CNY faces next key resistance at 7.2773 (a level that is the year-to-date high)
Aussie, kiwi hit hardest
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 11 – 16 November
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
