The results are finally in, with a resounding victory for Trump, who received 295 electoral votes against Harris’s 226. Trump has won the electoral vote and the popular vote – the first time a Republican has done so since 2004.
The initial reaction to the US election results led to an increase in US Treasury bond yields and US Dollar strength against most currency pairs.
This morning the DXY Index rebounded below the 105.00 barrier as markets prepare for the Fed announcement later today.
The Fed is widely expected to announce a 25 bps cut in light of a cooling labour market and softening inflation. Markets will be reluctant to price in a more aggressive Fed policy easing following the US presidential election results.
US election results led to selling pressure for EURUSD, leading the pair to multi-month lows around 1.0680. Most importantly, the pair broke below the 200-day moving average near 1.0870, allowing room for further weakness in the coming days.
The pair has recovered slightly though, hovering around 1.0750 at the beginning of the session as traders are preparing for today’s Fed interest rate announcement.
The Swedish Riksbank will be deciding its rate policy today, with a high likelihood that rates will be cut from 3.25% to 2.75%. With Sweden’s core inflation rising just above their 2% target in a recent flash reading, the bigger cut will increase the pace of easing and aid economic recovery.
After hitting lows of 1.2835 during yesterday’s session, cable has recovered toward 1.2950 as traders adjust their positions ahead of BoE and Fed monetary policy announcements later today.
The chance of a 25 bps cut is currently sitting at 99.8%, with rates decreasing from 5% to 4.75%. Key data that has led to this locked-in rate decision comes from inflation below target, the labour market showing signs of weakness, and PMI survey data showing a slowdown in growth.
