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FOREX: USD Down Early Asia Pac, As Trump Election Odds Fall

FOREX
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The USD is sharply weaker early Monday Asia Pac trading. Gains are broad based for the G10, although the higher beta plays are outperforming at the margin. AUD is up around 0.85%, NOK by 0.65%. NZD is up 0.50%, while yen is around 0.55% firmer. USD/CNH is down 0.35%.

  • Weekend news around opinion polls for this week's US election show tight race, with one poll showing Harris ahead in a number of swing states (see this Rtrs link).
  • Another poll showed Harris doing well in Iowa, which is state Trump has won in the last two elections. See this BBG link.
  • Trumps election odds per PredictIt and Polymarket are well off recent highs. This is likely driving early USD weakness, as markets turn more cautious on Trump related trades, which are seen positive for the USD (reflationary policies and higher tariffs).
  • The chart below plots Trump election odds from Polymarket and the BBDXY USD index. Note the BBDXY index pricing is not yet trading for Monday's session.
  • Bitcoin is also down around 0.40%, another favored Trump proxy trade. 

Fig 1: Trump Election Odds & USD BBDXY Index - 1 month 

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The USD is sharply weaker early Monday Asia Pac trading. Gains are broad based for the G10, although the higher beta plays are outperforming at the margin. AUD is up around 0.85%, NOK by 0.65%. NZD is up 0.50%, while yen is around 0.55% firmer. USD/CNH is down 0.35%.

  • Weekend news around opinion polls for this week's US election show tight race, with one poll showing Harris ahead in a number of swing states (see this Rtrs link).
  • Another poll showed Harris doing well in Iowa, which is state Trump has won in the last two elections. See this BBG link.
  • Trumps election odds per PredictIt and Polymarket are well off recent highs. This is likely driving early USD weakness, as markets turn more cautious on Trump related trades, which are seen positive for the USD (reflationary policies and higher tariffs).
  • The chart below plots Trump election odds from Polymarket and the BBDXY USD index. Note the BBDXY index pricing is not yet trading for Monday's session.
  • Bitcoin is also down around 0.40%, another favored Trump proxy trade. 

Fig 1: Trump Election Odds & USD BBDXY Index - 1 month 

Keep reading...Show less