FX markets seem to be positioning for a Trump victory in next month's US presidential election. October seems to have been a good month for Donald Trump in opinion polls and the US Dollar (USD) is bid across the board. Interestingly in the week to last Tuesday (15th) speculators and in particular asset managers bought the USD heavily against the euro, but also against the Canadian dollar. Canadian dollar and Mexican peso would not have as easy a ride as they did back in 2018/19 if Trump was re-relected, ING’s FX analyst Chris Turner notes.
USD is rallying broadly
“It is with US elections looming large that FX markets this week face the challenge of geopolitics. The IMF meetings in Washington are more a forum for central bankers to share their latest views (and many central bank governors will be speaking), but we also have Russia hosting a BRICS summit and no end in sight for Middle East tension. Geopolitics in the driving seat is evidenced by gold pushing above $2700/oz even though the USD is rallying broadly.”
“It is hard to see this dynamic changing substantially over the next couple of weeks. On Wednesday, the Federal Reserve does release its Beige Book report ahead of the next FOMC meeting on 7 November. Many believe the soft showing of the prior Beige Book release prompted the FOMC to start with a 50bp cut in September. This release is probably seen as the biggest threat to the USD this week. Yet, US consumption and the labour market have held up recently, and there is no guarantee that this week's Beige Book release will push interest rate markets into pricing 50bp of Fed easing this year compared to current pricing of just 43bp.”
“The USD has come quite a long way in a short space of time. But unless the Beige Book surprises on the downside or Thursday's European PMIs miraculously surprise on the upside, it seems that DXY will probably stay bid in the top end of a 103-104 range.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD resumes slide below 1.0500
EUR/USD gained modest upward traction ahead of Wall Street's opening but resumed its slide afterwards. The pair is under pressure in the American session and poised to close the week with losses near its weekly low at 1.0452.
GBP/USD nears 1.2600 as the US Dollar regains its poise
Disappointing macroeconomic data releases from the UK put pressure on the British Pound, yet financial markets are all about the US Dollar ahead of the weekly close. Demand for the Greenback increased in the American session, pushing GBP/USD towards 1.2600.
Gold pierces $2,660, upside remains capped
Gold (XAU/USD) puts pressure on daily lows and trades below $2,660 on Friday’s early American session. The US Dollar (USD) reclaims its leadership ahead of the weekly close, helped by rising US Treasury yields.
Broadcom is the newest trillion-dollar company Premium
Broadcom (AVGO) stock surged more than 21% on Friday morning after management estimated on Thursday’s earnings call that the market for customized AI accelerators might reach $90 billion in fiscal year 2027.
Can markets keep conquering record highs?
Equity markets are charging to new record highs, with the S&P 500 up 28% year-to-date and the NASDAQ Composite crossing the key 20,000 mark, up 34% this year. The rally is underpinned by a potent mix of drivers.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.