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FOREX: Greenback Leads on Rates-Driven Trump Rally

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  • The USD is holding a large part of the overnight gains as the election comes close to a conclusion. Trump looks to have secured the Presidency and the Senate, but the votes are still being counted for the House - the last hurdle toward the Republican Party securing a full red sweep for next year.
  • GBP/USD's intraday run lower has stabilised - with the pair recouping close to 80 pips off the lows to trade either side of 1.2900 at typing. With election results all but confirmed, and UK PM Starmer congratulating Trump on his victory, short-term focus will likely remain on rates differentials. The hawkish shift across '25 US rates contrasts with stronger rate-cut pricing for the BoE next year, prompting a tightening of ~10bps in the Jun'25 UK-US rate spread. The move's been closely tracked by GBP/USD, and will likely remain a focus as markets head through both the Fed and BoE decisions this week.
  • Volumes have been impressive: GBP futures 4x average for this time of day, EUR 6x average, JPY 3x average.
  • Outside of the USD, unsurprisingly the MXN is the poorest performer globally - off near 3% and leading the weakness across EM currencies, as those with keen exposure to tariff risk and international trade conditions also trade offered (HUF, ZAR similarly weak).
  • Among G10, EUR weakness pervades and while the single currency is just off lows, EUR/CHF has made a notable break lower - narrowing the gap with support of 0.9333. The break lower in EUR/USD and the low print of 1.0720 saw a solid uptick in volumes - suggesting some decent support ahead of the 1.07 handle. Weakness through here opens 1.0666 as the next major level.
  • The data schedule is light ahead, keeping focus on central bank speakers including BoC's Rogers and ECB's Lagarde, de Guindos and Villeroy. FOMC members remain inside their pre-rate decision media blackout, with the rate decision tomorrow still fully priced for a 25bps rate reduction. The Brazilian central bank are seen hiking rates by 50bps later today.
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  • The USD is holding a large part of the overnight gains as the election comes close to a conclusion. Trump looks to have secured the Presidency and the Senate, but the votes are still being counted for the House - the last hurdle toward the Republican Party securing a full red sweep for next year.
  • GBP/USD's intraday run lower has stabilised - with the pair recouping close to 80 pips off the lows to trade either side of 1.2900 at typing. With election results all but confirmed, and UK PM Starmer congratulating Trump on his victory, short-term focus will likely remain on rates differentials. The hawkish shift across '25 US rates contrasts with stronger rate-cut pricing for the BoE next year, prompting a tightening of ~10bps in the Jun'25 UK-US rate spread. The move's been closely tracked by GBP/USD, and will likely remain a focus as markets head through both the Fed and BoE decisions this week.
  • Volumes have been impressive: GBP futures 4x average for this time of day, EUR 6x average, JPY 3x average.
  • Outside of the USD, unsurprisingly the MXN is the poorest performer globally - off near 3% and leading the weakness across EM currencies, as those with keen exposure to tariff risk and international trade conditions also trade offered (HUF, ZAR similarly weak).
  • Among G10, EUR weakness pervades and while the single currency is just off lows, EUR/CHF has made a notable break lower - narrowing the gap with support of 0.9333. The break lower in EUR/USD and the low print of 1.0720 saw a solid uptick in volumes - suggesting some decent support ahead of the 1.07 handle. Weakness through here opens 1.0666 as the next major level.
  • The data schedule is light ahead, keeping focus on central bank speakers including BoC's Rogers and ECB's Lagarde, de Guindos and Villeroy. FOMC members remain inside their pre-rate decision media blackout, with the rate decision tomorrow still fully priced for a 25bps rate reduction. The Brazilian central bank are seen hiking rates by 50bps later today.