The week ahead brings fireworks and the U.S. election—what a combination! The result is too close to call. A poll released on Saturday by the well-regarded Des Moines Register showed Kamala Harris with a 47%-44% lead in Iowa, a state Trump won comfortably in the last two elections. Overnight, the dollar fell on the back of this news, weakening against all G10 currencies. The other mover was oil, which rose after OPEC+ delayed an output hike. A holiday in Japan has kept trading light.
Away from "election fever," we have the Fed meeting on Thursday, where they are widely expected to deliver a 25-basis point cut following September’s 50-bps reduction. Friday’s nonfarm payrolls report showed that jobs growth almost stalled in October due to the impact of strikes and weather disruptions. This data has cemented expectations for the rate cut. The Bank of England also announces its decision this week and is widely expected to lower rates by 25 bps after cutting rates for the first time in over four years in August. This policy decision could draw extra attention as it follows the Labour government's new budget, which steepened the rate curve last week, with UK borrowing costs rising to their highest levels in a year. The RBA is the other major central bank reporting; they are expected to keep their key interest rate unchanged on Tuesday, as strong economic activity and sticky core inflation still warrant a cautious approach.
As for today, we have Eurozone HCOB Manufacturing PMI and U.S. factory orders, but this week is all about the U.S. election—it will be fascinating.
