Affected by the weakening of the usd, non-usd currencies are experiencing a general rise in the market.

At 10:30 on November 4, the offshore RMB against the usd broke through the 7.10 barrier. As of the time of publication, the offshore RMB spot rate against the usd soared to 7.09248, breaking through 7.10, briefly surpassing the 7.09 level, returning to the level around October 15.

On November 4, a forex researcher from a Chinese investment bank in Hong Kong told Caixin that this round of forex volatility is mainly due to the USD Index and the US elections. Since the weekend, there has been a certain degree of deadlock in the US elections, with polls showing the two candidates getting closer again. Meanwhile, the preliminary voting results seem not to fully reflect Trump's pre-election popularity advantage.

Nanhua Futures reported on November 4 that, based on the policy analysis of the two candidates, Trump's presidency would bring a strong USD Index, while Harris's policy would trigger a weak USD.

In addition, Caixin journalists noted that prior to the election, Citigroup pointed out in its latest report that it was time to take profits on trades related to a potential Trump victory. Citigroup's Global Head of Macro Research and Asset Allocation, Dirk Willer, emphasized that historical data shows that major asset price fluctuations often occur before the elections, so even if the market's confidence in a Trump victory increases, locking in existing profits is a wise move.

The US election remains deadlocked at the last moment.

Dubbed by American media as the 'most fierce US election in 60 years,' early voting for the 2024 presidential election began last Friday. According to data from the University of Florida Election Laboratory, as of the afternoon of November 3, more than 76.46 million voters nationwide had already cast early votes for the 2024 presidential election.

However, according to the National Broadcasting Company (NBC)'s last pre-election poll in the United States, the support rates for Harris and Trump are currently tied at 49%. 2% of voters say they are still undecided on their choice.

Foreign analysts believe that in the early voting stage, the latest poll reasons for the negative outlook on Trump's election prospects show that Harris unexpectedly and significantly leads in the traditionally Republican states of Idaho and Iowa. This indicates that Trump may be in a 'backyard on fire' situation.

Nanhua Futures believes that considering the current weak domestic fundamentals and the market staying only at the expected level, we believe that as the U.S. election approaches, the USD to CNY spot exchange rate, which has been mainly affected by the improving external environment, is likely to change significantly. Bi-directional fluctuations may become the main status of the exchange rate before the U.S. elections.

The weakening of the USD, will Trump's trading end early?

According to Wind data, since the opening on November 3 Beijing time, the US Dollar Index has plummeted in a straight line from 104.31 to 103.70. Not only has the RMB depreciated, but the US dollar against the Japanese yen, Canadian dollar, Singapore dollar, Swiss franc, Malaysian ringgit, and other non-US currencies have generally weakened by 0.3% to 0.8%.

In fact, as the election approaches, Nanhua Futures has noticed the appearance of 'Trump Trading' take-profit levels. Therefore, despite the overall bullish situation for the U.S. economic data announced within the week, the USD index is still showing a slight decline.

This is similar to Citibank's view before the election. Although the market generally holds an optimistic view of Trump's chances of winning, historical experience tells us that timely profit-taking in high-risk investment environments may preserve more profits and fund security. With the election day approaching, the market's uncertainty will inevitably increase.

However, on November 4, Bloomberg released an opinion stating that one factor of the so-called 'Trump Trading' is the rise in U.S. bond yields and the strengthening of the USD. Regarding the recent weakening of the USD index, Bloomberg bluntly points out as a signal that investors are losing confidence in Trump's victory.

Editor/Rocky