04.11.2016 Daily Market Analysis


On Friday, the US dollar (USD) managed to make up for some of the losses during the week, yet this gain was limited by worries over a tightening US presidential election race. The dollar index (DXY) traded at 97.244, up 0.1%, moving away from a 3-week low of 97.041 seen overnight.

As Democrat Hillary Clinton’s lead over Republican Donald Trump is starting to dwindle, as a result of investigations into her private email server, the dollar index has declined almost 1.2 percent this week. Interestingly, last week, the index hit a 9-month high on the possibility that the Federal Reserve will increase interest rates later this year.

While investors are focused on the outcome of the US election, which is taking place on the 8th of November, little focus has been on the Fed’s policy decision earlier this week where the central bank hinted at a rate hike in December. The release of the US nonfarm payrolls report expected later today could impact the expectations of a rate hike next month.

According to analysts polled by Reuters, there is an expectation for nonfarm employment to have increased by 175,000 in October, compared to 156,000 in September. If an upbeat jobs report is released, this is expected to increase the hopes for a rate hike in the country next month, which supports the greenback and pushes US yields higher.

In other currency news, the USD traded higher against the Japanese yen (JPY) at 103.080 yen, up 0.1%. The greenback has declined 1.6% this week alone against the yen from well above 105.00. This has occurred as polls are showing that Trump is closing the gap on Clinton. The yen, like the Swiss franc (CHF), are viewed as safe haven currencies and these currencies have been positively impacted by the Trump jitters, which have created doubt in the global markets.

Meanwhile, the euro (EUR) traded at $1.1092, down 0.1% while the British pound (GBP) traded higher 0.1% at $1.2476. This increase came after the UK High Court ruled on Thursday that the government needed parliamentary approval to trigger procedures to leave the European Union. This helped to ease Brexit fears among investors.

Today, investors will focus on the release of the US nonfarm payroll number for October as well as the Unemployment Rate.