USD in a Tight Range Awaiting US Midterm Elections

Market Reviews

New Zealand dollar is trading as the weakest one for, followed by Japanese yen and Swiss franc. US dollar is trading mixed, as investors are cautious on the eve of the midterm elections in the United States and before the next Fed meeting this week.

Australian dollar is trading broadly higher today, after publication of the Reserve Bank of Australia’s meeting results. As expected, the Central Bank kept the interest rate at a record low of 1.5% and said that low rates support the economy. RBA noted that GDP growth forecasts for 2018 and 2019 were “revised up a little” to around 3.5%. GDP growth would slow in 2020 due to “slower export growth or resources”. Labor market outlook “remains positive” and unemployment rate is expected to drop further to around 4.75% in 2020.

On stock markets, US markets closed mixed overnight. DOW gained 0.76%, S&P 500 rose 0.56%, but NASDAQ lost 0.38%. In Asia, Nikkei added 1.08%. But Hong Kong HSI, Shanghai SSE and Singapore Strait Times are all in red.

The US and China will hold a top-level security meeting on Friday in Washington. Secretary of State Mike Pompeo, Defense Secretary Jim Mattis, Chinese politburo member Yang Jiechi and Defense Minister Wei Fenghe will be involved in the meeting. The meeting is generally seen as a sign of warming-up ahead of the meeting between Trump and Xi in the upcoming G20 summit later in the month.

Yesterday, the European Parliament’s international trade committee approved the EU-Japan trade deal signed back in July 17, 2018. The deal, which will create a trade zone of 600m people, covering a third of global GDP and around 40% of global trade, could now be sent to the full chamber for a vote in December plenary session.

Today’s data showed, that Japanese household spending dropped sharply by 1.6% yoy in September versus expectation of 1.6% yoy gain. UK BRC retail sales monitor rose 0.1% yoy in October.