All Eyes on the Polls as Dollar Hits Reverse

Markets moved further to price in a Biden victory and potential blue sweep Tuesday, with early voting patterns suggesting turnout could be among the best in over 100 years. The market responded to the perceived higher likelihood of a Biden victory by selling the greenback notably, buying up equities and steepening the Treasury curve.

Commodities were a notable beneficiary, with WTI and Brent crude futures rallying sharply, adding over 2.5% to support the likes of AUD, CAD and NOK further, which sat in the top half of the G10 table.

Despite markets pricing in the further likelihood of a smooth Biden victory, currencies are still acutely aware of the risk of volatility. The very front end of the vol curve for USD vs. JPY, EUR, GBP has risen to its highest level since the depths of the COVID crisis, heightening the focus on Tuesday's results.

The fallout of the election, Chinese Caixin PMI, US ADP Employment Change and ISM Services numbers are the Wednesday focus.