The United States Dollar is continuing its recent run of strength this morning, gaining ground against most major currencies following last week’s banner performance even in the face of a weaker performance on Friday.
Overview
Treasury yields are higher across the curve this morning, giving USD some room to run as equities falter. Gold and oil, too, rose overnight as investors continue to search for hedges on geopolitical risk. Middle East tensions continue to simmer, and with the US election less than 3 weeks out the haven bid of gold in particular is quite attractive.
Israel’s ongoing regional conflict continues to be in focus today after an alleged Hezbollah-launched drone crashed next to Israeli PM Benjamin Netanyahu’s private residence over the weekend, further signs that tensions are continuing to escalate in the area. The PM also led a series of meetings with his top security officials to discuss a potential retaliation against Iran for their most recent attack. The nations have continued to trade off shots against each other for the last several months, with little sign of any abatement in tensions on the horizon. Such action is keeping the haven bid for USD alive and well, and keeping CHF’s haven positioning strong as well.
Election anxieties have firmly taken over the foreground of the domestic picture, as early voting has begun in some states and election day itself is just over two weeks away. Polling between the two major candidates continues to tighten, effectively making the race a dead heat. The Dollar continues to benefit as a hedge against risk in either direction, especially given the Federal Reserve’s latest interest rate decision will hit the wire just one day after election day in the US.
What to Watch This Week…
- Bank of Canada Meeting, Wednesday
- S&P Global Composite Flash PMI, Thursday 8:30AM
- WEBINAR: Navigation Election Uncertainty – Oct 23 @ 2pm EST
- Monex USA Online is always open
JPY ⇓
Japanese Yen, after managing to remain fairly steady through choppy trading on Friday, continued to edge weaker and toward levels that in the last year have prompted serious discussion on intervention from the nation’s currency authorities. New polling from Japan showed that the ruling coalition LDP may fall short of the amount of seats necessary to maintain a parliamentary majority, but the focus for the USDJPY pair is much more on US elections at the moment. The Bank of Japan’s next interest rate decision is due out October 31, just five days before the US election and six before the Fed’s next decision.
MXN ⇓
Mexican Peso’s recent woes continue this morning, as the currency slid a further half a percent against USD in Asian and European trading. MXN is, generally speaking, quite sensitive to US election risk and former President Trump’s recent upswing in polling data has weighed quite a bit on the currency over the last couple of weeks. Emerging market assets in general are not set to perform well today as global risk sentiment remains overall quite poor. Last week’s performance for MXN was its worst against USD since August, posting a decline of 3.1% against the Buck.
