The US election results initially spurred a sell-off in tech shares as Democrats may be more interested in regulating AI than the current administration, and local initiatives on ballots seemed overwhelmingly to support limits on the data center build out. That said, the amount of territory or percentage of data center plans seem relatively modest. While equities have recovered, the dollar remains broadly lower. The intraday momentum indicators are stretched, and the greenback has begun consolidating after session lows were recorded in the European morning.
The dollar’s drivers, including the outlook for Fed policy and the economy, are likely to be more supportive over the next 48 hours or so. The US sees the ADP private sector jobs estimate today, alongside the final services and composite PMI, ISM services, and the September trade balance. Several Fed officials speak tomorrow and Friday, and those that have spoken recently seem to support a rate hike next month. And then on Friday, is the October jobs growth is seen a little more than 60k, which would be better than the three-month average.
Prices
G10
• The euro consolidated yesterday in about a third of a cent range above $1.1175. The response to the US election results saw it reached nearly $1.1265 in European morning, even as tech stocks recovered from the initial drop. The five-day moving average is poised to move above the 20-day moving average today or tomorrow for the first time since mid-September. Options for 1.35 bln euros at $1.1250 expire today. A convincing above the $1.1270 area could signal scope for another cent gain. Initial support now is seen around $1.1220.
• The yen fell to nearly a three-week low yesterday, when Japan was on holiday. The greenback settled above the 200-day moving average, which comes in slightly above JPY158.60 today. The dollar poked slightly above JPY158.75 yesterday. It held today and the dollar was sold to nearly JPY157.40 initially. It recovered to around JPY158.40 in the European morning. The intraday momentum indicators are stretched.
• Sterling settled slightly firmer but sufficient to post its high close since mid-September. Still, it traded within Monday’s range and was mostly confined to about a third of the cent above $1.34. It has been bid to $1.3500 today, its highest level since mid-September. Barring a reversal, sterling will also settled above its 200-day moving average for the first time since then, as well. The $1.3470 area corresponds to the (61.8%) retracement of the decline from the August high (~$1.3675). The intraday momentum indicators are stretched. Initial support now is seen in the $1.3450 area.
• The US dollar rose to a three-day high against the Canadian dollar yesterday, slightly below CAD1.4010. It settled near session highs recorded late day. The US two-year premium over Canada widened for the third consecutive session. It is the longest such streak in a month. However, the US dollar has come back offered and is already posting an outside day. The close is important, and settlement below CAD1.3940 could spur a move toward CAD1.3885-CAD1.3900.
• The Australian dollar was sold to almost $0.6960 yesterday, an 11-session low, and the (61.8%) retracement of the rally from mid-October. The market suspects the central bank’s fifth hike is the last. Inflation is still firm, but the weakness seen in some data if sustained could help moderate price pressures, and of course, full impact of this year’s aggressive hikes has still to be felt. The Aussie is recording a key upside reversal today by initially recording a new low for the move (~$0.6955) before recovering through yesterday’s high (slightly above $0.7005) to approach $0.7025. The intraday momentum indicators are over-extended.
EM
• The Mexican peso gave up Monday’s 1.1% gain and more yesterday. The peso fell by about 1.4% yesterday. The data disappointed but it seemed like an outsized loss is that was the culprit. September worker remittance fell by more than expected but were still a handsome $5.36 bln and nearly $150 mln more than a year ago. Recall, too, that in September, the peso fell by 6.3%. The dollar initially edged slightly above yesterday’s high (~MXN18.8670) and reached MXN18.87 before it was sold back below MXN18.58. A break of MXN18.50 would boost the chances a top is in place.
• The market thinks the PBOC sent a signal that pushed back against further one-way appreciation of the yuan. The dollar rose by about 0.35% against the offshore yuan yesterday, its first gain since October 14. The greenback rose to CNH6.6855 today, its highest level since October 19. The PBOC set the dollar’s fix higher for the third consecutive session today (CNY6.7180 vs. CNY6.7150 yesterday). It matches the longest streak since June.
• The dollar was sold to a nine-day low against the Indian rupee initially today (~INR94.5025) and recovered to INR94.8725 before it consolidated. It settled slightly below INR94.65.
Other Markets
• After Monday’s shellacking, the Nasdaq Composite and S&P 500 bounced back by a little more than 0.85% and 0.35%, respectively. Hong and Chinese stocks rallied amid reports that officials will support Chinese equities. Taiwan and South Korea were mixed, but the latter dropped 4% before recovering fully. Japan’s Nikkei 225 was sold below the 200-day moving average for the first time since mid-2025 before it recovered and settled back above it. Europe’s Stoxx 600 is up almost 1.2%, which it sustained, would be the largest gain in three months. US index futures are up over 1%.
• The US 10-year Treasury yield fell slightly below 4.87% on Monday, its lowest level since September 10. It recovered to almost 4.97% yesterday and settled slightly below 4.95%. Outside of Japan, where the 10-year JGB yield rose four basis points to 2.8%, other benchmark yields are lower today. Rates are mostly 2-6 bp lower in Europe and the French and Italian premiums over German continue to narrow. The 10-year Treasury yield is off a 3-4 bp to straddle the 4.93% area.
• Gold consolidated yesterday mostly within Monday’s range, which itself was within the range set before the weekend. It has broken higher out of the consolidation and reached nearly $4050 today, a four-day high. Last week’s high was slightly above $4082, and the 20-day moving average is closer to $4075. Silver recovered after setting a new low for the year (~$48.60). It reached a little more than $50.50 in the North American morning before it was pressed back to almost $49.50. It has rebounded to $52.25 today but is consolidating a little below $52 in late European morning turnover.
• The prospect of a US-Iran agreement held drive December WTI from a contract high before the weekend (~$105) to yesterday’s low near $93.50. Iran seemed to play down the story. Still, Dec WTI settled slightly lower yesterday, less than $0.40 softer, and below the 20-day moving average for the second consecutive session. The contract is consolidating today, with a heavier bias.
Data
• The US Treasury will announce its quarterly refunding plans amid expectations that the 20-year may be dropped entirely and the sales of the 30-year may be trimmed. The September trade balance, final October service and composite PMI are due alongside the ISM services Index. The US trade deficit has averaged -$69.6 bln a month in the first eight months of the year. It compares with an $86.9 bln monthly deficit in the Jan-Aug 2025 period, when there was a significant attempt to front-run US tariffs. The average trade deficit in the first eight months of 2024 was about $68.7 bln. The Atlanta Fed GDP tracker is 3.2% for Q4 and the median forecast in Bloomberg’s survey is for 2.1%.
• Canada reports September merchandise trade and the October services and composite PMI. Both were below 49.0 in September. Canada’s trade balance has shown marked improvement this year. The average monthly balance has swung from a C$3.47 bln deficit to C$1.6 bln surplus this year. The August surplus of C$4.2 bln was the largest since May 2022.
• Brazil’s central bank meets today. It has cut rates five times for 125 bp this year (to 13.75%) and while the cycle is not over, it will likely stand pat today. Mexico has cut rates twice this year, but not since May. It will likely keep the policy rate steady at 6.5%.
• The eurozone final services PMI stands at 51.4 (51.7 flash and 53.0 in September, the high for the year). The composite PMI is at 51.7 (51.9 flash and 53.1 September, which is also the cyclical high.
• The UK’s final October services and composite PMIs were a little softer than the preliminary estimate. The services PMI is at 52.8 (53.1 preliminary and 52.1 in September), and the composite PMI is at 52.9 (53.1 preliminary and 52.0 in September). The market is confident that the Bank of England will lift the base rate tomorrow to 4.0% from 3.75%. The swaps market has three more hikes discounted through the end of Q3 27.
• Sweden’s Riksbank delivered the first hike in the cycle earlier today. Its policy rate now stands at 2.0%. The swaps market is discounting another hike in Q1 27. The market is discounting around 100 bp of hikes next year. Norway’s Norges Bank meets tomorrow. The central bank hiked its deposit rate to 4.25% in May. Pricing in the swaps market suggests expectations for it to be on hold next year.
• Australia’s final October services PMI is at 48.2 (47.8 preliminary and 51.9 in September). It was the third consecutive monthly weakening and the first sub-50 reading since May. The final composite is at 48.5 (47.7 preliminary estimate and 51.3 in September). It is the weakest since March. Separately, Australia reported a 0.6% rise September’s household spending after August was revised to a 0.1% decline from an initial flat estimate. Given the base effect, the year-over-year rise in household spending is likely to moderate going forward. It peaked at 7% in July and stood at 6.8% in September.
• China’s RatingDog October services and composite PMIs were reported earlier today. The services PMI fell to 50.8 from 51.6. It peaked in May at 54.4. The composite PMI also slipped—52.0 from 52.4. It also peaked in May (54.0) and was at 51.8 in October 2025.
Reviewed by Marc Chandler
on
November 04, 2026
Rating:
