Markets Hold Their Breath Ahead of Tight US Election Results

Hello traders, welcome to Tuesday, where the markets remain poised for major developments, particularly due to the ongoing US elections. While today may seem quiet on the surface, it’s a critical day in terms of market anticipation. The elections are expected to significantly influence sentiment, but as is often the case with tight races, final results may not be immediate, leaving the markets in suspense.

This morning, the Reserve Bank of Australia announced its interest rate decision, keeping the rate unchanged at 4.35%. This steady stance did not come as a surprise, yet it provided a sense of temporary stability in the markets. Later in the day, key data releases include ISM Services PMI from the US, expected at 53.8, and employment figures from New Zealand, where the unemployment rate is forecasted to rise notably from 4.6% to 5%. Both of these events have the potential to impact market movements, especially in forex trading.

Currencies reflect the current atmosphere of waiting and low volatility. The Australian dollar and New Zealand dollar are leading gains today, partially supported by Australia’s rate hold and the anticipation of employment data from New Zealand. The Canadian dollar is also showing some strength. On the opposite side, the Japanese Yen is weaker, although the moves are not drastic, indicating that traders are holding back until a clear trigger appears.

The US dollar, another focal point this week due to the elections, has shown subdued movements as the markets are adopting a “wait-and-see” approach. The outcome of the election will likely dictate the direction for the dollar in the coming sessions. The British pound and euro have remained relatively stable, mirroring the cautious tone in the markets.

Indices across the globe are moving sideways, hinting at the prevailing uncertainty. European markets opened with a neutral tone, while US futures suggest a similar start. The recent 10-day and 5-day performance indicators for major indices lean towards a bearish outlook, suggesting a cautious sentiment among traders. However, this downtrend has not been steep or alarming—rather, it reflects market participants bracing for potential shifts post-election.

On the commodities front, metals like gold and silver are undergoing a bearish correction after reaching local highs at the end of October. This dip could be viewed as a normal pullback following their recent bullish runs. Despite this correction, both metals remain near significant levels, which traders are watching closely for signs of a bounce or continued decline.

Oil, however, tells a different story. After a rough start to October, oil prices have staged a notable recovery, showing gains of nearly 6% over the past five days. This rebound could be attributed to supply concerns and geopolitical factors. Currently, oil is approaching key resistance levels, and a breakout above these levels would be a strong buy signal for traders. The contrasting movements between oil and metals indicate a decoupling of their trends, with oil finding more support as metals retrace.

Source: https://www.axiory.com/analytics/market-news/markets-hold-their-breath-ahead-of-tight-us-electi