Forex Forecast

US Voting Underway Polling has opened across the US, and the first state results are expected after 00:01 GMT on Wednesday. If all the state votes are decisive, a winner may be declared by around 04:00 GMT.

Voting Begins In The US Polling has opened on the Eastern Seaboard and we expect market activity to remain limited through the rest of the day as results filter in, from 19:00 ET, and if all the state votes are decisive, a winner may be declared around 23:00 ET.

RBA Surprises, Stays On Hold The RBA kept the policy rate unchanged at 3.25% overnight, surprising a majority of Bloomberg-surveyed economists who had been looking for a 25 bp cut.

Election Day Activity was predictably subdued ahead of the US Presidential Election, which remains too close to call.

Shaky Start To Crunch Week Risk appetite was soft overnight as markets started a key event risk week in rather defensive mode. There are no immediate catalysts beyond the usual ‘uncertainty’ argument, though it does appear that the political impasse in Greece is starting to be noticed.

Dollar Holds Gains Overnight the dollar held onto most of Friday’s gains in the wake of the strong US employment data.

A Stronger Dollar The better than expected US employment report for October reinforced two key themes that should gain traction into next year: (i) US cyclical leadership;

Risk Stabilises Pre-Payrolls Risk stumbled early during the European session, lacking obvious macro catalysts, though there were signs of stabilization on the US open, with several bourses edging into positive territory but struggling to hold these levels.

Yen Looks To US Payrolls USDJPY stayed propped up during the Asia session in anticipation of a consensus-beating US employment report. A strong ADP payrolls number on Thursday has helped stoke expectations, although methodological changes to that survey further undermines its status as a ‘leading indicator’ for today’s BLS payrolls survey.

EUR Stumbles Reports that the Greek Court of Auditors has ruled the proposed pension reforms – namely, increasing the retirement age by two years to 67 and cutting pensions by between 5-10% – may be unconstitutional undermined EURUSD at a time when markets have been expecting a ‘solution’ that would avert a near-term crisis.

Risk Seeks Footing Despite some initial wobbles at the open, risk appetite has broadly managed to hold on to gains, with key European equity indices all trading higher.