US election day!

Election Day

Wall Street sentiment closed mixed yesterday, as the European and US markets started the week cautiously. Today’s US presidential election shows no clear frontrunner, raising the prospect of a contested outcome that has left investors uncertain.

Dollar Outlook

The EUR/USD pair holds firm around 1.0880 early today. Election-related uncertainty in the US pressures the dollar, lending support to the euro. Analysts at ING Bank note that a Republican victory across the board could provide a modest boost to the dollar. However, a Harris win would likely place greater downward pressure on USD, particularly if Republicans maintain control in the House of Representatives.

Meanwhile, the Japanese yen weakens slightly on Tuesday, but hawkish signals from the Bank of Japan and a muted risk appetite lend stability to the safe-haven currency.

Commodities

Gold sees some buying interest following an intraday dip to a one-week low, trading near $2,735 as the European session begins. The ongoing election uncertainty and a backdrop of geopolitical concerns help stabilize demand for the precious metal. In addition, signs of a cooling US labor market and increased expectations of Fed rate cuts have put downward pressure on US Treasury yields, indirectly supporting non-yielding gold. Silver, on the other hand, remains in a holding pattern as traders weigh election-driven uncertainties, with potential support from anticipated stimulus measures in China.

Oil markets experience downward pressure as traders await US election results. Despite this, WTI saw a notable 3% uptick following OPEC+’s decision to delay its planned December production increase. In the longer term, expectations of a large stimulus package exceeding 10 trillion yuan from China could bolster demand for crude, offering potential support for oil prices.

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