On Tuesday (November 5th), during the Asian early trading session, the dollar index slightly fluctuated, barely maintaining above the 200-day moving average of 103.84. On Monday, the dollar fell by 0.4% due to the unwinding of “Trump trades,” temporarily hitting a nearly two-week low of 103.58. Investors are retracting positions related to expectations of Trump's policies, as the market perceives a decline in Trump's approval ratings. Meanwhile, Democratic candidate Harris has shown a certain advantage in some polls and prediction markets, intensifying market sentiment volatility.
As the results of the U.S. elections approach, the market's focus on the dollar's movement is intensifying, especially as the election results might influence future fiscal and trade policies. TD Securities has pointed out that if the Republicans win, the dollar may rebound significantly; if the Democrats win, the dollar might face downward pressure.
Additionally, investors are closely monitoring the upcoming Federal Reserve meeting. The market anticipates that the Federal Reserve will maintain interest rates at the current level in this meeting, but any signals about a rate cut in December will impact the dollar's movement. Weak employment data has sparked concerns over the U.S. economy, further increasing the market’s focus on potential policy adjustments.
In terms of the Australian dollar and the euro, the Australian dollar remained stable around 0.6581, with the market adopting a wait-and-see attitude towards possible policy moves by the Reserve Bank of Australia. Improvement in the eurozone manufacturing PMI allowed the euro to remain stable against the dollar around 1.0873 in the early Asian session. Additionally, the movements of the pound and yen have also been affected by the U.S. elections, with the market waiting for election results to decide the next steps in trading strategies.
