### United States
Following the closure of the North American markets, a notable shift occurred as investors reignited their interest in the “Trump trade,” reversing the previous day’s cautious stance. This spurred a surge in the dollar and U.S. interest rates. Notably, the United States is eagerly awaiting the results of key states such as Alaska, Nevada, Arizona, Michigan, and Maine. Even if the hypothetical candidate ‘Harris’ were to win all of these, it would not suffice to secure the necessary electoral college votes. In contrast, Trump seems to have garnered victories in Pennsylvania, Wisconsin, and Georgia, states he did not win in 2020. This electoral scenario appears to favor the Republicans, who are projected to have captured the Senate, although the House remains undecided. As a result, U.S. equities are buoyant, with NASDAQ climbing 1.8% and the S&P 500 ascending 2.3%. Treasury yields have seen a notable rise, with the 10-year yield jumping over 16 basis points to 4.44%, the highest since late June, and the two-year yield increasing by eight basis points to 4.26%.
### Eurozone
The eurozone’s economic landscape remains impacted by an energy shock that has disrupted its manufacturing sector. The PMI for manufacturing increased to 46 in October, yet it remains below the critical 50 mark since mid-2022. The services PMI saw a slight upward revision to 51.6, maintaining its presence above 50 since January. Meanwhile, the composite PMI briefly surpassed 50 in March but dipped below this level in September, returning to the threshold in October. The euro, having reached nearly $1.0940, dropped to close to $1.07 today, marking its lowest point since early July. Continued pressure could prompt a retest of this low in the North American markets.
### United Kingdom
In the United Kingdom, recent economic data revealed a decrease in the October construction PMI to 54.3 from a multi-year high of 57.2 in September. As the Bank of England convenes for a meeting, market expectations are leaning towards a quarter-point rate cut. Similarly, Sweden’s Riksbank is anticipated to deliver a half-point cut amid the release of its October CPI. In currency movements, Sterling broke past the $1.30 barrier. However, it faced some selling pressure, dropping below $1.2850 but managing to avoid slipping past last Thursday’s low. Since then, Sterling has struggled to break above $1.2925, suggesting a possible retest of previous lows in North America.
### China
Market participants keep a close watch on the U.S. electoral results, China is witnessing a resurgence of optimism as expectations rise for the Standing Committee of the National People’s Congress to endorse a comprehensive multi-year fiscal program. This initiative could potentially involve restructuring local government debt, stabilizing the housing market, injecting capital into banks, and boosting domestic demand. Meanwhile, the U.S. dollar has strengthened against the offshore yuan, reaching levels not seen since early August. The People’s Bank of China set the dollar’s reference rate at CNY7.0993, indicating its vigilance in managing exchange rate fluctuations.
### Japan
Japan’s economic data spotlighted a waning sentiment as the final services and composite PMI numbers fell below 50, marking the first such occurrence since June and November of the prior year, respectively. As anticipation builds around tomorrow’s labor earnings report, the Japanese yen experienced weakness against the U.S. dollar, with the latter gaining significant ground to a high witnessed in July. This heightened dynamics suggests a possible further advance targeting JPY155.00-20.
### Canada
In Canada, economic attention is directed towards the IVEY survey amidst the backdrop of an upcoming jobs report. Market participants are factoring in a slightly over 50% chance of a half-point rate cut next month. In currency markets, the U.S. dollar reached a two-year peak against the Canadian dollar last week, before making a modest retreat. However, subsequent trading saw the greenback regain strength, hovering around CAD1.3885.
### Australia
The Australian dollar experienced a sharp decline of nearly 2% after a strong two-day rally. It initially fell to $0.6515, marking a three-month low before recovering some ground. Despite this, challenges remain as broader geopolitical and economic trends weigh on the currency’s performance in the global market context.
### Mexico
In Mexico, the peso has suffered against the backdrop of a robust U.S. dollar, falling notably. This was further amplified with the dollar setting a two-year high against the peso. Nonetheless, economic data releases, namely vehicle production, exports, and the much-anticipated CPI, are awaited. Additionally, the central bank’s meeting today, which may see an acceleration in its tightening cycle, is in the spotlight. A potential 50 basis-point hike in the Selic rate is widely anticipated.
