FX168 Financial News Agency (Asia-Pacific) News: The currency market was active in early trading on Monday (November 4th) as a recent poll in Iowa showed Democratic presidential candidate Kamala Harris leading Republican candidate Donald Trump, causing a hit to the US Dollar.
The US Dollar fell 0.9% against the Japanese Yen, 0.6% against the Euro, while the Australian Dollar, closely related to trade, rose by 0.8%.
Analysts generally believe that Trump's stance on immigration, tariffs, and tax policies will put greater upward pressure on the Dollar and yields, while Harris's victory would have a more moderate impact.
Of note, a Des Moines Register/Mediacom poll in Iowa shows Harris leading Trump by three percentage points, a development unforeseen a few weeks ago. This poll is considered a barometer of swing state sentiment with a good historical predictive record.
JPMorgan pointed out in a report:
"Since last week, Harris's support has increased in polls, especially in Iowa's Selzer poll, which many see as an indicator of performance in key swing states like the 'Blue Wall' (Michigan, Pennsylvania, and Wisconsin)."
PredictIT data shows Harris's support rising to 53 cents, while Trump's is at 51 cents (42 cents and 61 cents respectively a week ago), reflecting investors' expectations of winning odds.
However, overall poll results remain hard to predict, and the election outcome may not be known until Wednesday. For example, in 2020, Pennsylvania election results were only announced the Saturday after the election. Additionally, the election results may lead to legal challenges, causing delays of several weeks.
The market generally believes that regardless of the election results, the Federal Reserve will cut interest rates as scheduled on Thursday, with the futures market indicating a 98% probability of a 25 basis point rate cut. At the same time, the market expects an 80% probability of another rate cut in December, but this expectation may change depending on the elected president.
The Bank of England is expected to cut interest rates by 25 basis points on Thursday, while the Swedish central bank is expected to cut rates by 50 basis points. The Norwegian central bank and the Reserve Bank of Australia are expected to keep interest rates unchanged this week.
Another major driving factor in the market on Monday is the rise in oil prices. After OPEC+ announced the postponement of the planned December production increase on Sunday, oil prices rebounded by about 1.4%. This is the second extension by OPEC+ of the 2.2 million barrels per day production cut plan, showing its concerns about global demand. Especially in the Asia market, which displayed weakness, LSEG data shows that crude oil imports in the first 10 months of this year decreased by 0.2 million barrels per day compared to the same period in 2023.
Key events that may influence the market on Monday:
ECB President Christine Lagarde and Executive Board member Piero Cipollone will attend the Eurogroup meeting
ECB members Elizabeth McCaul, Frank Elderson, Christodoulos Patsalides, and Claudia Buch will also make appearances
Final value of Eurozone manufacturing PMI for October
U.S. durable goods orders and factory orders for September
