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FOREX: USD Gains Further as Markets Narrow In On Election

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  • Markets continue to narrow in on the still too-close-to-call US election, with the near-term upside in the dollar showing little signs of abating. Greenback strength and the yawning US-JN 2yr yield spread are working further in favour of USD/JPY, which touched a new recovery high at 152.56 in European hours, extending the clearance of the 50% retracement of the downleg off the July high. 153.40 marks the next notable level.
  • Pervasive USD strength extends across G10 this morning, with the USD Index touching 104.353 today for the highest print since early August. A close at current or higher levels for the USD Index confirms a clean break of 104.087 (61.8% retracement for the downleg off the April high) and provides another strong signal of near-term momentum in the greenback.
  • GBP trades well, prompting a second consecutive session of losses for EUR/GBP, which remains tilted toward recent lows and the bear trigger at 0.8295. Moves come alongside the continued pricing and speculation that the ECB could up the pace of their rate cutting cycle as soon as the December meeting, with markets still pricing a ~50% chance of a 50bps step before year-end.
  • The Bank of Canada today are expected to increase the pace of rate cuts with a 50bps move, more aggressively shifting Canadian monetary policy out of restrictive territory and closer toward neutral. A not insignificant minority, however, look for a smaller move of 25bps. The decision and statement are set for release at 1445BST/0945ET. US existing home sales and speeches from ECB's Lagarde, Lane, Cipollone, Escriva, Knot & Centeno, BoE's Bailey and Fed's Barkin make up the rest of the schedule.
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  • Markets continue to narrow in on the still too-close-to-call US election, with the near-term upside in the dollar showing little signs of abating. Greenback strength and the yawning US-JN 2yr yield spread are working further in favour of USD/JPY, which touched a new recovery high at 152.56 in European hours, extending the clearance of the 50% retracement of the downleg off the July high. 153.40 marks the next notable level.
  • Pervasive USD strength extends across G10 this morning, with the USD Index touching 104.353 today for the highest print since early August. A close at current or higher levels for the USD Index confirms a clean break of 104.087 (61.8% retracement for the downleg off the April high) and provides another strong signal of near-term momentum in the greenback.
  • GBP trades well, prompting a second consecutive session of losses for EUR/GBP, which remains tilted toward recent lows and the bear trigger at 0.8295. Moves come alongside the continued pricing and speculation that the ECB could up the pace of their rate cutting cycle as soon as the December meeting, with markets still pricing a ~50% chance of a 50bps step before year-end.
  • The Bank of Canada today are expected to increase the pace of rate cuts with a 50bps move, more aggressively shifting Canadian monetary policy out of restrictive territory and closer toward neutral. A not insignificant minority, however, look for a smaller move of 25bps. The decision and statement are set for release at 1445BST/0945ET. US existing home sales and speeches from ECB's Lagarde, Lane, Cipollone, Escriva, Knot & Centeno, BoE's Bailey and Fed's Barkin make up the rest of the schedule.