Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Greenback opens lower in election week
The US dollar was weaker on Monday as the US presidential election remained incredibly tight with most analysts saying the race remains “too close to call”.
In the two leading betting markets, the odds shifted remarkably. Harris took an advantage late last week on Predictit, with the race currently 53-51 in favour of Harris (numbers don’t total 100).
On Polymarket, Trump maintains the lead, but a 30-point lead in mid-October has fallen to an eight-point lead.
In traditional polling, the average result from the ABC News 538.com survey has Harris at 48.0% with Trump at 46.9%.
However, RealClearPolitics has Trump just ahead of Harris in the seven battleground states.
Both 538.com and RCP’s results are within the margin of error.
Recently, increasing probability for a Trump win has supported the US dollar, while Harris gains have seen the US dollar ease.
Central banks also critical
Apart from the US election, FX markets will focus on a packed central bank schedule this week with policy decisions due from the Federal Reserve, Reserve Bank of Australia, Bank of England, and several other major central banks.
The Reserve Bank of Australia kicks off proceedings on Tuesday with its rate announcement. Markets will watch whether the RBA continues its tightening cycle with consensus expecting unchanged number at 4.35% rate.
The Bank of England meets Thursday, followed by the week’s highlight – the Federal Reserve’s policy announcement early Friday morning (AEDT) with the FOMC statement and Chair Powell’s press conference to follow.
Markets will closely watch Powell’s guidance on future policy direction.
Chart shows growth outlook is becoming more balanced based on FOMC participants’ assessments.
Euro at three-week highs as momentum shifts
The euro has been one of the main beneficiaries of last week’s moves in election markets.
Looking forward, we anticipate that the euro area Sentix poll for November will show improvement; the headline index is predicted to increase from -13.8 to -13. This is mainly thanks to better-than-expected GDP growth numbers,
The European equities sell-off in the week before the survey period, however, is probably going to moderate any improvement in sentiment.
The euro has seen an improvement over the last week and the EUR/USD has recovered from the trend line from October 2023.
We believe that a consistent break above the resistance level of 1.087–1.0873 would validate a trend reversal higher in EUR/USD – and post-election moves might likely be the trigger.
USD lower on Monday
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 4 – 9 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.
