All eyes were on the US elections on Tuesday, encouraging pre-event positioning and volatile price action among major assets.
US dollar alternatives such as Bitcoin and gold rose, while US stocks found support from a potential Trump win.
Titles:
- The Reserve Bank of Australia kept interest rates at 4.35% as expected and maintained the hawkish bias that supported the Australian dollar early Tuesday.
- The Swiss unemployment rate held steady at 4.6% as expected in October
- French industrial production fell by 0.9% m/m in September (expected -0.5%, previous reading reduced from 1.4% to 1.1%)
- Spanish Unemployment Change in October: 26.8K (26.5K expected, 3.2K previous)
- The US trade deficit widened from $70.8 billion to $84.4 billion in September (deficit expected to be $83.4 billion) as exports fell 1.2% while imports rose 3%
- US S&P Global Final Services PMI In October the rating was lowered from 55.3 to 55.0
- US Services Purchasing Managers’ Index (ISM). October at 56.0 (53.8 expected, 54.9 previous) as employment rose for the third time in four months while prices fell 1.3 points
Broad market price movement:
Dollar index, gold, S&P 500, oil, US 10-year yield, Bitcoin overlay Chart by TradingView
Major assets started flat as traders braced for the US elections, with most markets remaining in ranges – with the exception of Bitcoin. The BTC/USD pair took off, rising late Monday to reach $69,000 by the European session. Gold, another alternative to the dollar, also rose in early Asian and European trading.
Volatility rose during the US session as election uncertainty put pressure on 10-year Treasury yields, preventing investors from piling into the dollar. At the same time, the expectation of a possible Trump victory gave US stock markets a boost.
Major assets bounced during the US services PMI release but ultimately ended the day near US session levels.
Forex market behavior: US dollar against major currencies:
Overlay of the US dollar against major currencies Chart by TradingView
The US dollar took fresh hits around the Asian and European session opens, likely with traders unloading the US dollar ahead of the US election drama.
In the US, mixed final reports for the S&P and ISM PMIs slowed the dollar’s decline, keeping it volatile before bears took control of the dollar and pushed it lower through the end of the day.
Potential catalysts coming on the economic calendar:
- German Factory Orders at 7:00 AM GMT
- Services PMI in Spain at 8:15 AM GMT
- Services PMI in Italy at 8:45 AM GMT
- Final Services PMI in France at 8:50 AM GMT
- Final Services PMI in Germany at 8:55 AM GMT
- Eurozone final services PMI at 9:00 AM GMT
- UK Construction PMI at 9:30 AM GMT
- Eurozone Producer Price Index at 10:00 AM GMT
- Eurozone ECB President Lagarde will deliver a speech at 2:00 PM GMT
- Canada Ivey PMI at 3:00 PM GMT
- US crude oil inventories from the EIA at 3:30 PM GMT
- BOC member Carolyn Rogers will speak at 5:25pm GMT
- Reserve Bank of New Zealand Governor Orr will deliver a speech at 7:10pm GMT
- Japan cash earnings at 11:30pm GMT
European traders are seeing German factory orders and a new round of PMI reports today, which could spark volatility in European currencies such as the Euro, British Pound and Swiss Franc during the session.
We’ll also hear from ECB President Lagarde, the Bank of Canada’s Rogers, and RBNZ Governor Orr, so expect currency-specific moves in the European and US sessions.
Meanwhile, US election headlines could continue to drive the broader market mood, impacting major assets such as oil, gold, bitcoin and stocks.
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