Details Cookies
Cookie Policy

This website uses cookies to offer you a better browsing experience by enabling, optimising and analysing site operations, as well as to provide personalised ad content and allow you to connect to social media. By choosing “Accept all” you consent to the use of cookies and the related processing of personal data. Select “Manage consent” to manage your consent preferences. You can change your preferences or retract your consent at any time via the cookie policy page. Please view our cookie policy here and our privacy policy here

FX Update: USD traders hold breath for US election. RBA up tonight. FX Update: USD traders hold breath for US election. RBA up tonight. FX Update: USD traders hold breath for US election. RBA up tonight.

FX Update: USD traders hold breath for US election. RBA up tonight.

Forex 5 minutes to read
John Hardy

Head of FX Strategy

Summary:  The US dollar may have a hard time pressing its upside directional case any farther here until a clear picture emerges (or just as importantly, does not emerge) in the wake of the US election tomorrow. Tonight, the RBA meets and is likely set to cut rates and launch a QE programme of considerable size. The chief question for AUD traders is how much of that is already in the price.

Please note: I am penning a series of daily articles on the US Election countdown. In Sunday’s article Iran down the evidence, strong or not, that the strong expectations of a sufficiently strong Democratic Blue Wave to avoid election drama, as I highlight credible voices from those who are still suggesting the risk of a strong Trump showing. I take considerable pains to highlight how ugly the market action could get if we are facing a contested election scenario. Also, in Saturday’s article, I looked at how 2016 Election Night unfolded and the market reacted in real time to the result as it crystallized, as well as what to watch for this time around.

Today will feature a podcast round-up of the articles and a few additional thoughts.

Today’s FX Trading focus:

Can the USD continue any higher until we start to see election outcomes?
The EURUSD has eyed the range lows from September this morning and a break could set up stop-loss driven shenanigans below 1.1600 ahead of the US election results very (very) late tomorrow, but is anyone really making any decision on the US dollar here ahead of the event itself besides placing the odd options bet (hedging USD upside risks it would seem, if so). As I discussed in my list of election scenarios and possible market reactions to them, the one outcome that might sustain a stronger US dollar the longest (on the other side of a contested election setup -  very tough to decide there whether the USD liquidity premium in volatile markets keeps the USD firm or weaker) would be on in which Biden wins but there is no Democratic majority in the Senate. That blocking Republican majority would prevent an enormous amount of stimulus from seeing the light of day relative to expectations and could derail the reflationary narrative for a time. A miraculous Trump win might prove less restrictive on the stimulus front – his only priority is ensuring that Democratic states aren’t extended a lifeline while drop whatever amounts of helicopter cash are required to improve the stock market and his “ratings”.

If the USD does continue to press stronger, the next key zone for EURUSD, for example, is the  1.1400-1.450 zone if the round 1.1500 level can’t hold. Below 1.1400, the EURUSD structural bullish argument is failing.

RBA tonight - what's in the price?
The RBA is up overnight in the Asian session tonight and our Aussie Eleanor Creagh has penned a great preview of this meeting and the likely set of decisions to be made. The key question is what is already in the price as and where the RBA exceeds or doesn’t quite live up to expectations, with the important drivers for AUDUSD likely switching more urgently to the US election outcome and its effect on the reflationary narrative very quickly after this meeting.

We all know what is coming tonight from the RBA, with surprises only at the margin on the size of the cut and the magnitude of the QE programme (current 10-year yield spread to the US is pegged near the post-Covid-19 train wreck lows coming into this meeting). But if risk sentiment remains weak and gets worse (especially in a contested US election scenario or if it emerges quickly that the Democrats will not take the Senate) a US dollar spike higher could deepen and take this pair well south of 0.7000. Regardless, that 0.7000 zone is an important one and could open up for a test of 0.6800, near the 200-day moving average, if broken. But we remain long term bulls beyond short-term volatility on the prospects for a reflationary environment and highly negative US real rates, especially under a strong Blue Wave US Election outcome.

Source: Saxo Group

Value in NOK?
Crude oil prices are beating a steep retreat on surging Libyan crude oil production on the supply side (and those fearing a strong Democratic sweep will fear the arrival of more Iranian barrels of crude as well) while on the demand side, the latest series of lockdowns across Europe and perhaps on anticipation that the US  could be headed the same way are weighing. On that latter note, we’re not very likely to see anything remotely comprehensive in terms of restrictions on the US front as long as Donald Trump is in the White House, which he will be at least up until Inauguration Day 2021. Sure, the downside threats to oil remain, but we are likely “getting there” in terms of putting in a market low as the kind of shock that sent oil prices nominally negative in the US futures market is unlikely to repeat. And even when we saw that remarkable development back then, together with conjecture of whether things were getting so bad in general that the authorities might have to shut markets, NOKSEK, to take  an example, only managed to close down below 0.9000 on one single daily close. With NOKSEK poking below 0.9300 this morning, the pair feels like a good value trade for the long term – and possibly provides some volatility protection at the margin relative to trying a NOK long via EURNOK shorts, as NOK and SEK would both likely suffer during liquidity panics. Of course, traders should note that it is an illiquid pair, so pricing a large trade in volatile markets can prove a challenge.

Upcoming Economic Calendar Highlights (all times GMT)

  • 1500 – US Oct. ISM Manufacturing
  • 0330 – Australia RBA Cash Target



Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.