Forex Today: US Dollar slips ahead of US elections and RBA

Tuesday, 3 November: key market developments to watch

October’s ISM Manufacturing PMI beat forecasts, but the encouraging economic figures have been overlooked by market participants, leaving the US Dollar (USD) under pressure. Geopolitical developments remain a key influence following reports of a potential breakthrough in US-Iran negotiations. Traders are also preparing for the US mid-term election results, Factory Orders and the Job Openings and Labour Turnover Survey (JOLTS). At the time of writing, the US Dollar Index (DXY) is down 0.24% at 101.72.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

US Dollar Performs Best Against Australian Dollar Today

Today’s percentage movements in the US Dollar (USD) against the major currencies listed are set out below. The Australian Dollar was the currency against which the US Dollar performed most strongly.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.33%	-0.16%	0.21%	0.10%	0.49%	0.19%	-0.88%
EUR	0.33%		0.18%	0.53%	0.42%	0.82%	0.52%	-0.52%
GBP	0.16%	-0.18%		0.38%	0.25%	0.63%	0.33%	-0.70%
JPY	-0.21%	-0.53%	-0.38%		-0.09%	0.29%	-0.00%	-1.07%
CAD	-0.10%	-0.42%	-0.25%	0.09%		0.40%	0.09%	-0.95%
AUD	-0.49%	-0.82%	-0.63%	-0.29%	-0.40%		-0.29%	-1.34%
NZD	-0.19%	-0.52%	-0.33%	0.00%	-0.09%	0.29%		-1.03%
CHF	0.88%	0.52%	0.70%	1.07%	0.95%	1.34%	1.03%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. Selecting the US Dollar on the left and following that row across to the Japanese Yen, for instance, gives the percentage change for USD (base)/JPY (quote) in the corresponding cell.

Solid HCOB PMI readings in Spain and Germany contrasted with Italy’s weaker-than-forecast result, which fell from 50.4 to 49.4 into contraction territory. Despite that Italian reading, EUR/USD is on course to end Monday’s session 0.33% higher, below 1.1200. Tuesday’s attention turns to speeches from European Central Bank (ECB) officials Joachim Nagel and Olaf Sleijpen.

After GBP/USD touched a high of 1.3448, buyers were unable to maintain the advance, leaving the British Pound trading near 1.3400. Although the economic calendar is empty, traders can continue to price in a Bank of England (BoE) rate rise on Thursday. LSEG data put the probability at close to 100%.

Following the Bank of Japan’s (BoJ) dovish surprise last Friday, USD/JPY remains rangebound. Money markets anticipate higher interest rates at the December meeting, although the message was moderately hawkish.

Ahead of the Reserve Bank of Australia (RBA) Interest Rate Decision at 03:30 GMT, AUD/USD fell to 0.7000. Investors anticipate a 25 bps rate rise, with the probability standing at 85%. Alongside the policy decision and publication of the RBA Monetary Policy Statement, markets await the press conference by RBA Governor Bullock.

A move from around 0.8250 to 0.8182 drew investors’ attention to USD/CHF, the standout performer in the FX market, despite the absence of an obvious catalyst. Switzerland’s October Consumer Price Index (CPI) release could determine the pace for the Swiss National Bank (SNB), which is expected to retain its currency policy stance with one of the lowest interest rates.

Rumours of a potential resolution between Washington and Tehran sent West Texas Intermediate (WTI) crude sharply lower. A report from Axios that US President Trump favours allowing more time for diplomacy with Iran before contemplating further strikes is weighing on WTI, which is down more than 6.60% at $96.11.

Broad US Dollar weakness has supported Gold (XAU/USD), given its positive correlation with WTI, putting it on course for a gain of more than 1.50% to $3,964 per troy ounce. Market structure nevertheless continues to point to an overall downward trend, although a recovery is likely if buyers retake $4,000. Lower US Treasury yields have also helped lift the precious metal to its current spot price.