Usman Salis
The USD retreats under selling pressure as markets focus on the upcoming U.S. presidential election, key economic data, and global market reactions.
USD Faces Heavy Selling Pressure Ahead of U.S. Election
The U.S. Dollar (USD) opened the week under significant selling pressure as investors positioned themselves for the U.S. presidential election on Tuesday. Monday's U.S. economic docket is light, with Factory order data for September being the only significant release. In the Eurozone, investors will follow the November Sentix Investor Confidence report and revisions to the October HCOB Manufacturing PMI for Germany and the broader Eurozone.
Despite a 0.4% gain on Friday, the USD Index opened with a bearish gap on Monday, dipping to a two-week low below 104.00. U.S. stock index futures, however, showed a slight rise in early European trading on Monday, signaling a cautious start for the week as investors keep an eye on both the election and upcoming economic data.
The U.S. Nonfarm Payrolls (NFP) report revealed an increase of just 12,000 jobs in October, a significant miss from the 113,000 market expectation. The previous month’s figure was also revised down to 223,000 from 254,000. According to the Bureau of Labor Statistics (BLS), the payroll figures may have been influenced by hurricane-related disruptions. However, the exact impact remains unquantified due to the limitations of the establishment survey in isolating extreme weather effects.
EUR/USD and GBP/USD Rise as USD Weakens
In currency markets, EUR/USD ended last week with gains despite snapping a four-day rally on Friday. On Monday, the pair capitalizes on USD weakness and approaches 1.0900, while GBP/USD shows renewed bullish momentum, pushing toward the 1.3000 mark where it met resistance last week.
USD/JPY saw a reversal on Friday with a gain of over 0.6% but slipped back on Monday, trading near 152.00. In commodities, gold pulled back sharply from recent highs, dropping almost 2% in the latter part of the week. XAU/USD held steady on Monday, trading near $2,740 as market participants assessed safe-haven demand amid upcoming political and economic developments.
Conclusion
In Asia, Australian data showed a rise in the TD-MI Inflation Gauge to 3% year-over-year in October, up from 2.6% in September. The Reserve Bank of Australia (RBA) is expected to announce its monetary policy decision early Tuesday, with most analysts forecasting that it will hold the policy rate steady at 4.35%. The AUD/USD remains stable, trading near 0.6600 as it begins the week on a positive note.
Usman Salis
