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Solid Equities Headed into Midterms Keeps Lid on USD Recovery Rally

  • Following a somewhat quiet and lacklustre start to the Tuesday session, risk appetite has picked up very modestly headed into the NY crossover with an uptick in equity futures (putting the e-mini S&P further above the 50-dma) helping put AUD toward the top of the G10 pile.
  • Contrary to the bump higher in equity markets, JPY gains hold firm, with USD/JPY back below Y146.50 and eyeing support at 146.09. The pair is likely eyeing the beginning of vote counts in the US midterm elections, with results expected to filter through across the Wednesday Asia-Pac session.
  • The USD Index is more stable at recent lows, holding the bulk of the decline posted since the Nonfarm payrolls report on Friday last week. Key parameters for the DXY going forward include support at the October lows of 109.535 and the 50-dma on any recovery rally at 111.2375.
  • Another day absent any key US data or central bank speakers, keeping focus on the CPI release due Thursday - seen as key for short-term direction headed into the December FOMC meeting. Speeches from BoE's Pill (already spoken today) and ECB's Wunsch could draw some attention.

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