The time has come! The US elections occur this week, and the latest polls have Trump and Harris running very close. Yields have continued their recent bounce, but deteriorating economic data could mean we are very close to the top.

The US Dollarspent much of last week on the back foot, but it managed to close the week broadly unchanged even though NFPs disappointed. Last week, the DXY index closed flat at 104.317.

The Euro performed well following better-than-improved Eurozone GDP and CPI numbers. Last week, the single currency posted some modest gains against the USD and GDP, as well as most of the other majors.

The British Pound had a forgettable week without major economic data, moving broadly sideways.

Commodity currencies had a fifth consecutive negative week as oil fell and the Dollar rallied. Commodities, in general, have been underperforming and are oversold, so chances are that we can have a snap rally after the US elections. Last week, the AUD, NZD, CAD, and NOK all fell between 0.2% and 0.8% against the Dollar. Elsewhere in FX, the CHF and JPY posted slight losses.

Oil continued its recent move lower as a Middle East escalation didn’t materialise. Last week, the WTI fell 3.3% to close at $69.29.

Precious metals are correcting for a second week, following their recent breakout higher. This is expected before another leg goes to the upside. We should expect metals to perform very well in the event of a Harris election win. Last week, Gold fell 0.4% to close at $2,736, and Silver dropped 3.8% to close at $32.45.

Bonds fell further as markets worldwide worried about higher inflation for longer. Yields are now a bit overstretched and heading towards resistance, so it’s likely that we will see a fall after the elections. Last week, the 10-year UST yield rose 14bps to close at 4.38%, and the 10-year Bund fell 1% to 131.528 points.

Equities had a second negative week in a row as markets worried about rising yields. Last week, the S&P500 and the DAX both fell over 1% to close at 5736 and 19255 points, respectively.

Finally, despite the risk-off move, crypto-currencies performed better than expected last week. It’s worth remembering that a Trump presidency will be very crypto-friendly, while a Harris administration will be the exact opposite. At the time of writing, Bitcoin is nearly 4% higher at $69,600, and Ethereum is up 1% at $2,510.

The Week Ahead:

It’s all about the US presidential elections next week. For the first time in many years, there seems to be a very different anticipated reaction to a Republican or Democrat win. The latest polls show that Trump and Harris are running extremely close, so markets will move after the result! Data-wise, we also have interest rate decisions from the FOMC, the BoE, the RBA and Norges Bank.

Market Commentary: This communication is for informational purposes only. It is not intended as an offer or solicitation to purchase or sell any financial instrument. All market prices, data, and other information are not warranted as complete or accurate and are subject to change without notice. Any comments or statements made herein do not necessarily reflect those of Coeus Capital. Coeus Capital does not assume any liability whatsoever for the content of this newsletter or make any representations or warranties as to the accuracy and completeness of any information contained in this newsletter.