SINGAPORE- Financial markets began the week on a cautious note, though moves in currencies stole the spotlight on Monday ahead of a busy week headlined by the US presidential race which is set to come down to the wire.
The week will also provide investors with global monetary policy catalysts with rate decisions from the Federal Reserve, the Bank of England (BoE), the Reserve Bank of Australia (RBA), Riksbank and Norges Bank.
China’s National People’s Congress (NPC) standing committee meets from Nov. 4 to Nov. 8, which will be closely watched for further details of a raft of stimulus measures that were announced recently.
Trading was thinned in Asia with Japan out for a holiday, but much of the early action was in currencies amid a broad fall in the US dollar.
Against the yen, the greenback slid 0.75 percent to 151.82 while the euro jumped 0.62 percent to $1.0901.
The Australian dollar rose 0.76 percent, while China’s yuan gained 0.46 percent in the onshore market
Dealers said the dollar’s decline might be linked to a well-respected poll that showed Democratic candidate Kamala Harris taking a surprise 3-point lead in Iowa, thanks largely to her popularity with female voters.
Still, Harris and Republican candidate Donald Trump remain virtually tied in opinion polls ahead of Tuesday’s election and the winner might not be known for days after voting ends.
“At the start of last week, we were pricing about a 48 percent chance of a red sweep… that’s fallen to around 36 percent this morning according to Polymarket. So, there’s been a significant easing around the probability of a Republican sweep… the Democrats have certainly closed the gap,” said Tony Sycamore, a market analyst at IG.
“As a result of that, you’re seeing some of the dollar ‘Trump trade’ rally start to come out of the market.”
Analysts believe Trump’s policies on immigration, tax cuts and tariffs would put upward pressure on inflation, bond yields and the dollar, while Harris was seen as the continuity candidate.
Cash trading of US Treasuries was closed in Asia due to the Japan holiday, but futures rallied 10 ticks.