## United States
A nervous calm prevails over the markets as the United States heads to the polls. The close presidential contest suggests that results may not be available as quickly as hoped, with many fearing the election marking merely the beginning of further disputes, including premature victory declarations and vote-related controversies. The US dollar is trading within mostly narrow ranges today, while the US 10-year Treasury yields have noted a slight increase of nearly two basis points to 4.30%. In terms of equities, US index futures are exhibiting a firmer bias, although the overall data might have limited immediate impact. The advanced goods deficit notably expanded by nearly 15% to $108.23 billion in September, the largest shortfall since March 2022. Meanwhile, the services ISM for October is expected to decrease to about 53.8, following a jump to 54.9 in September, marking the highest since February 2023.
## Eurozone
The euro witnessed a peak in early North American trading yesterday, nearing $1.0915—its best level since mid-October. However, a lack of buying from US accounts saw it dip slightly through $1.0880. Confined to around a quarter of a cent below $1.09 so far today, it also marked a settlement closer to $1.0830 last week. Meanwhile, in Sweden, October’s composite PMI rose impressively to 53.0 from 49.6 in September, breaking away from last year’s figure of 48.3. Swedish CPI numbers for October are anticipated to demonstrate that both the headline and core figures remain well below 2%. In Norway, the central bank is expected to stand pat at its current deposit rate of 4.50% as it awaits further developments, with its first rate cut anticipated in early Q2 2025.
## United Kingdom
As the Bank of England meeting looms, the UK’s final October services and composite PMI figures appear wedged between last week’s budget and the forthcoming meeting. The services PMI, having slowed for a second consecutive month to 52.0, mirrors the same trend in the composite PMI, which is also at 51.8—its lowest since November 2023. The market retains confidence that the BoE will execute its second cut in the cycle, potentially reducing the base rate to 4.75%. The probability of another cut in December has fallen from 57% a week ago to about 26% presently. The British pound touched just within 1/100 of a cent of the $1.30 mark yesterday, although the sterling settled below its opening level of $1.2965, yet remains firm today, noted within a 35-pip range of $1.2950-$1.2985.
## China
In China, the Caixin services and composite PMI figures rose significantly from 50.3 in September, with the services PMI increasing to 52.0 and the composite to 51.9. As the National People’s Congress convenes, speculation is rife regarding a potential unveiling of a multi-year fiscal initiative, potentially by the week’s end. Trade and reserve figures remain awaited in the coming days, with crucial CPI and PPI metrics expected on Friday. Additionally, the offshore yuan maintained a tight range, with the dollar rating within CNH7.1045-CNH7.1175 today, pushed on by the PBOC setting the reference rate at CNY7.1016.
## Japan
Japan is gearing up to release its final services and composite PMI tomorrow, followed by labor cash earnings data on Thursday. The political landscape sees the market contemplating the implications of DPP’s support for the LDP, potentially indicating a smaller supplemental budget yet suggesting a rise in the tax threshold for income. This measure could potentially ease pressure on part-time workers, albeit costing the government approximately JPY7-8 trillion in revenue, amounting to about 10% of annual receipts. In currency movements, the dollar briefly dipped below JPY151.55 but rebounded into the JPY152.20 range, largely driven by the US 10-year yield witnessing session highs above 4.32%.
## Canada
Canada records its September merchandise trade balance, maintaining monthly deficits since February with an average of about C$530 million this year. The service and composite PMI data are also due, with signs of prolonged sub-50 figures since May this year, dropping to 47.0 in September—a modest improvement compared to a year ago. Examining the meeting records from the Bank of Canada, following last month’s 50 bp cut remains crucial as markets assess the probability of another half-point reduction in December. Presently, the swap market has factored in a slightly higher than 55% chance for a cut, potentially bringing the target rate down to 3.25%.
## Australia
The Reserve Bank of Australia opted to keep interest rates steady, aligning well with market expectations, although growth projections were shaved, with inflation unlikely to reach target until 2026. Governor Bullock indicated that the implied path of the cash rate posed by the market was “as good as any.” This resulted in minimal reaction within the swap and interest rate markets. The services PMI stood firm above 50 since January, posting a final October reading of 51.0. It rose from the preliminary estimate of 50.6 and improved upon September’s 50.5. Meanwhile, the Australian dollar reached a five-session high locally, honing in on $0.6630-$0.6650, with potential momentum toward $0.6700.
## Mexico
The Mexican peso continues in firm demand for the third consecutive session, with the US dollar witnessing purchases on dips below MXN20.00. The unwinding of trades due to “Trump-trade” saw the dollar briefly slide just below MXN19.96 before recovering to MXN20.16. Meanwhile, Latam currencies demonstrated strong performance, with the Brazilian real headline gaining 1.7%, supposedly sustained by speculation of imminent spending cuts. Additionally, the Chilean and Mexican pesos each rose by about 0.8%, joined by the South African rand, witnessing a commendable rise of roughly 0.85%, with Fitch considering an upgrade in South Africa’s credit rating to BBB- if fiscal consolidation continues effectively.
