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Currency Market Analysis

Nov 07, 2018 | Currency Market Analysis

Global Themes

USD slips as midterms drive greenback lower

The US dollar fell overnight as market caution drove the US dollar lower ahead of today’s US midterm election results.

The US dollar has weakened as markets wait for the election results – seen as a critical referendum on President Donald’s Trump’s agenda.

FX markets expect the Democratic Party will take control of the lower House of Representatives in a result that might restrict President Trump’s ability to execute his agenda.

NZ jobs beat

With the US dollar weaker, other key markets gained.

The EURSGD climbed 0.1% but remains near three-month lows.

The New Zealand dollar was higher after a strong result from NZ employment this morning which saw the official NZ unemployment rate fall from 4.4% to 3.9%. The news was seen as a positive for local employment.

The Japanese yen weakened as it fell back to ten-month lows.

Midterm watch

The US election will dominate markets today with a stronger showing for President Trump’s Republicans likely to boost the US dollar.

With President Trump’s policy focus mostly boosting US demand, any advantage for Trump is likely to be seen as making further interest rate hikes more likely.

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