* Trump says election “ours to lose” as candidates mobilise voters

* Gold edges up as US election jitter, Fed policy meeting loom

* Treasury yields and dollar fall as investors brace for US election d-day

* Oil jumps over 3% as OPEC+ delays adding supply to market

FX: USD dipped to its 21-day SMA at 103.63 before paring losses and finishing back in the recent range. Polls over the weekend favoured Harris and some of the recent gains from the Trump Trade reversed. The Democrat’s higher tax (tight fiscal policy) and low tariff (ultimately looser monetary policy) stance is seen as limiting growth and inflation, so dollar negative. This is in contrast to Trump’s low-tax and high-tariff policies which have boosted bond yields and the greenback over the last few weeks.

EUR popped up to a high of 1.0914 before the world’s most popular currency pair settled virtually unchanged on the day. The dollar leg is driving prices obviously. The euro falls if Trump wins and gains on a Harris victory. There is very little European data released this week. But markets have scaled back dovish ECB bets after the latest growth and inflation data. The recent low is 1.0706 and resistance sits at 1.0903 and then 1.0974.

GBP finished up on the day but gave back some gains, having got close to 1.30. The Budget and gilt volatility seems to have subsided, though markets will be on alert to UK specific higher yields which could impact sterling. Attention will also be on commentary from the BoE on Thursday during its meeting where it very likely cut rates by 25bps.

JPY looked to be rolling over after printing a low at 151.52 but ended the day unchanged. The major is seen higher on Trump 2.0 as bond yields are expected to rise on his presumed inflationary policies. This move would reverse on a Harris victory with 150.76 first support and then a zone just above 148.

AUD traded above 0.66 before closing below on the day. The RBA meeting is not expected to be very eventful. Rates will be kept on hold at 4.35% as Governor Bullock recently said inflation “will take another year or two before it is sustainably back” in the 2–3% inflation target range given a positive output gap. There is currently only a modest chance of a rate cut in February. USD/CAD fell after it made a fresh cycle high at 1.3958 on Friday. That took it past the August spike top at 1.3946.

US Stocks closed lower with uncertainty heightened ahead of the election. The S&P 500 settled 0.28% lower at 5,712. The tech-laden Nasdaq 100 lost 0.35% to finish at 19,963. The Dow finished down 0.61% at 41,794. It was an inevitable choppy session as investors digested the latest polls. The final result may take a few days or even longer, which undoubtedly means volatility. The VIX, Wall Street’s fear gauge, moved above 20 and its long-term average of 19.46 to 21.98. Energy was the biggest gainer as oil climbed on OPEC+ output increase delay plans. Nvidia is set to replace Intel in the Dow Jones Industrial Average index. Intel fell close to 3%, dragging the Dow down.

Asian stocks: Futures are mixed. Asian stocks were generally in the green with Japan closed for a holiday. The ASX 200 was helped by strength in telecoms and tech, while Westpac earnings boosted financials. The Hang Seng and Shanghai Composite were mixed with the former flipflopping on losses in property and gains in autos. The mainland saw better on the unwinding of the Trump Trade.

Gold treaded water after last Thursday’s big drop but is still trading above $2700. The precious metal is up around over 32% in 2024. Performance could be more mixed under a new President. Higher yields would be a negative for bugs, but rising trade tensions could see a haven bid under Trump. Less inflationary pressure under Harris would be positive for gold, while geopolitics could be mixed.

Day Ahead – US Election is finally upon us!

The time for dissecting the polls and betting markets and understanding how the electoral college works among many other issues that we read about every four years, is now over. In short, the 47^th President will be decided by potentially less than 100,000 people in the critical swing states. It seems like Michigan, Wisconsin and Pennsylvania will determine who is the victor. Trump needs just one if we wins the southern states of Arizona, Georgia and North Carolina.

Early voting turnout has been high with nearly half of total votes that were cast in 2020. This typically favours the Democrats, but much can still happen. The potential for recounts and legal wrangling is high. That would mean a more protracted drawn out process to declare a winner taking several days or weeks. A clear-cut winner would be more preferable for markets as there is obviously more certainty. Market reaction will also be very different if we get a split Congress.

In short, a Harris win will see a reversal of recent market moves, which have been pricing in a Trump victory. The “Trump Trade” has seen bond yields, USD, gold, crypto and stocks go higher. A Republican clean sweep can potentially send the dollar higher, but probably by less than how much a Harris win could hurt the buck. The dollar might struggle to rally if Trump wins, but Democrats secure the house.

Chart of the Day – S&P 500 turns lower

Stock markets much prefer a unified Government rather than one which is divided. The latter is one when no one party controls the House of Representatives, the Senate and the White house at the same time. History tells us there is a roughly 2% underperformance over time versus a unified one. In the near-term, options markets are pricing in a potential swing of +/- 2.2% in the benchmark S&P 500 the day after the election. Watch out for knee-jerk, initial market moves which may offer volatility but are almost always a head fake. For instance, stocks sunk after Trump’s 2016 win for a day, and then rallied. Indeed, longer-term equity, asset class and sector returns are not generally reflective of a presidency.

Key levels on the blue-chip index are the all-time intraday high at 5,878, made in mid-October. The 21-day SMA sits at 5,799 and the 50-day SMA at 5,703. The first Fib retracement mark (23.6%) of the August-October bull move is here at 5,699. The major Fib below here (38.2%) resides at 5,588.