Psychology for major markets November 5th
USD shifting with election expectations.
EUR/USD – EUR/USD testing the top end of the recent range at 1.09 as latest polls edge towards Harris even though Trump remains the betting favourite.
USD/JPY – JPY benefitting from the latest US polls but significant JPY upside still unlikely until or unless there is some evidence of US economic weakness and/or a decline in equities.
EUR/GBP – GBP still under a little pressure after the post-budget decline with risks of further losses seen if the BoE cut rates this week.
AUD/USD – Showing a firmer tone after the RBA meeting which led to some further reduction in rate cut expectations. But still likely to struggle on a Trump victory with expectations of higher tariffs on China likely to undermine sentiment
Equities – S&P 500 may be toppy despite solid growth data with US yields still firm and valuations stretched. Market currently seeing upside risks on a Republican clean sweep but likely impact of US election remains unclear.