The Morning Update

On US Presidential Election Day, the US$ trades softer, oil and equities are rising while treasury yield are lower. Polls are expected to close between 7pm and 1am Eastern time. Given the tight race there is an above average chance that we may not know the winner until tomorrow. Boeing employees accepted the new contract ending a 7-week strike which includes a 38% pay hike spread over 4 years.

In other news. Biden administration is stepping up criticism of Israel for not doing enough to improve humanitarian conditions in Gaza as a 30-day deadline looms for Israeli officials to meet certain requirements or risk potential restrictions on military assistance. Zelenskyy urges allies to act before North Korean troops reach the front. Germany’s top diplomat arrived Monday in the Ukrainian capital on an unannounced visit, in what appeared to be a show of European support for Ukraine on the eve of a U.S. presidential election. China files complaint at World Trade Organization over EU tariffs on Chinese electric vehicles.

In currency markets. China's yuan slips from 3-week high on US election uncertainty. As part of his pitch to boost American manufacturing, Trump has promised voters he will impose tariffs of 60% or more on goods from China. Trump's proposed tariff and tax policies are seen as inflationary and therefore likely to keep U.S. interest rates high and undermine currencies of trading partners. South African rand stable as markets gear up for US vote. The Australian dollar barely blinked after the country's central bank held interest rates steady as expected and reiterated policy needed to stay tight. The Reserve Bank of New Zealand (RBNZ) is far more dovish given it has already cut rates by 75 basis points in two meetings and sounded a fresh warning on the economy in its financial stability review on Tuesday.

In commodity markets. Oil trades in tight range ahead of US election result. Gold and Silver steady as US election, Fed meeting loom. Wheat futures rose on Tuesday, after data showed that the U.S. winter wheat crop was off to its second-worst start since records began in 1986 and traders braced for the outcome of the U.S. presidential election.

Current level USD Index                           103.765             Down 0.12%

‍

The USD/CAD has strengthened for the second consecutive day receiving support from stable oil prices. US treasury yields could limit the C$ gains against the greenback.

Current level USDCAD                              1.3883                 Down 0.13%

‍

The EURCAD continue to trade above 1.5100 level it breached late last week. The focus remains on the expectation of a BoC 50 bps rate cut at their next meeting.

Current level EURCAD                               1.5122                 Up 0.02%

‍

The EUR rose this morning ahead of the US election, where the results are too close to call. From a policy standpoint, the ECB is expected to cut its rate by 25 bps at the December meeting.

Current level EURUSD                               1.0896                 Up 0.18%

‍

The GBPEUR consolidates as traders opt to wait ahead of Thursday BoE meeting. Bets that the BoE will cut rates slowly underpin the GBP, while diminishing odds of an aggressive ECB rate cut are supporting the Euro.

Current level GBPEUR               1.1914 (.8392)                    Down 0.03%    

The GBP trades higher against the USD on Election Day. Investors expect the Fed and the BoE to cut interest rates on Thursday. Market participants still assess the impact of the UK budget on inflation.

Current level GBPUSD                               1.2986                 Up 0.25%

‍