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FOREX: USD Surge Continues Ahead Of US Election

FOREX
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The USD bull run continues, as the US election comes into focus. The BBDXY index sits near 1264 in latest dealings, fresh highs back to early July of this year. 

  • Yen weakness dominated early, amid fallout from the LDP coalition losing its majority from Sunday's lower house elections. We are now in a period of uncertainty in terms of how the government and policy agenda will look. Some type of agreement between the LDP coalition with minor parties is likely to needed to pass legislation, if a formal alliance cannot be struck.
  • Compounding yen losses was a further surge in UST yields. The US 2yr yield got to 4.14%, but sits back at 4.12% now, while the 10yr got above 4.28% but is now back under 4.27%. Focus continues to be on next week's US election, with betting markets still firmly in Trump's favor but latest polls point to a close race.  
  • USD/JPY got to highs of 153.88, but sits back at 153.45/50, still off by around 0.75% for the session. The tick down from US yields from session highs likely helping this move in yen.
  • AUD and NZD have softened as the session has progressed. AUD/USD is at 0.6580, fresh lows back to August of this year, while NZD/USD is at 0.5960, also fresh lows back to the first half of August.
  • Oil prices slumped as the market took some comfort from Israel striking military targets in Iran over the weekend (rather than oil or nuclear facilities). Still, this did little to impact UST yields in the first part of trade.
  • Regional equity markets are mixed, with Japan seeing gains despite the weekend election result, while aggregate China/HK markets are down, despite signs of improving property sales in China.
  • Looking ahead, there are few events or data today. The October US Dallas Fed manufacturing index and Spain’s September retail sales print. The ECB’s de Guindos speaks.
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The USD bull run continues, as the US election comes into focus. The BBDXY index sits near 1264 in latest dealings, fresh highs back to early July of this year. 

  • Yen weakness dominated early, amid fallout from the LDP coalition losing its majority from Sunday's lower house elections. We are now in a period of uncertainty in terms of how the government and policy agenda will look. Some type of agreement between the LDP coalition with minor parties is likely to needed to pass legislation, if a formal alliance cannot be struck.
  • Compounding yen losses was a further surge in UST yields. The US 2yr yield got to 4.14%, but sits back at 4.12% now, while the 10yr got above 4.28% but is now back under 4.27%. Focus continues to be on next week's US election, with betting markets still firmly in Trump's favor but latest polls point to a close race.  
  • USD/JPY got to highs of 153.88, but sits back at 153.45/50, still off by around 0.75% for the session. The tick down from US yields from session highs likely helping this move in yen.
  • AUD and NZD have softened as the session has progressed. AUD/USD is at 0.6580, fresh lows back to August of this year, while NZD/USD is at 0.5960, also fresh lows back to the first half of August.
  • Oil prices slumped as the market took some comfort from Israel striking military targets in Iran over the weekend (rather than oil or nuclear facilities). Still, this did little to impact UST yields in the first part of trade.
  • Regional equity markets are mixed, with Japan seeing gains despite the weekend election result, while aggregate China/HK markets are down, despite signs of improving property sales in China.
  • Looking ahead, there are few events or data today. The October US Dallas Fed manufacturing index and Spain’s September retail sales print. The ECB’s de Guindos speaks.