Dollar Spur by Trump’s Leading Position in Election

• Donald Trump's current leading in the U.S. election spurred the dollar to jump more than 1%.

• BTC was fueled by the “Trump” effect and is back to the all-time high territory.

• BoE and Fed monetary policies are due tomorrow and may fluctuate the dollar and the Sterling.

Market Summary

As vote counting for the U.S. election continues, Donald Trump is currently leading, which has spurred a “Trump trade” sentiment in financial markets. This momentum has caused the U.S. dollar to surge, with the Dollar Index jumping nearly 1%. Wall Street responded positively as well, with both major indices closing higher. Tesla shares climbed in the last session, as Elon Musks alignment with the Trump campaign positioned the company to benefit from current election developments.

Bitcoin (BTC) also rallied near its previous high, trading above $72,000, as Trump has historically been linked to digital assets in campaign rhetoric, stirring optimism among crypto traders.

Outside of the election, traders should remain vigilant of central bank actions, with the Bank of England (BoE) expected to announce its first rate cut soon, which could weigh on the British Pound. Additionally, the Federal Reserves monetary policy decision is scheduled for tomorrow, with an anticipated 25 bps rate cut that could influence dollar strength.

Finally, the Chinese National Peoples Congress is underway, and markets are watching closely for announcements of a large-scale economic stimulus package from Beijing, which could support global risk assets, particularly commodities and currencies tied to Chinese trade.

Current rate hike bets on 7th November Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (4.4%) VS -25 bps (95.6%)

Market Movements

DOLLAR_INDX, H4

Should Trump win, a somewhat stronger dollar is expected due to his pro-growth policies, which likely would support higher interest rates and tariffs, adding tailwinds to the currency. However, from todays elevated levels, market sentiment suggests that dollar depreciation could follow the election, irrespective of the victor. In Asian trading, Treasury yields are climbing as bonds sell off, indicating market expectations of potential Trump-backed policies. The 10-year Treasury yield rose over 4 basis points, providing a proxy trade for a possible Trump victory, as higher yields tend to support the dollar, which is also strengthening against major currencies in Asia.

The Dollar Index is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 59, suggesting the index might extend its gains after breakout since the RSI stays above the midline.

Resistance level: 104.35, 105.15

Support level: 103.45, 102.35

XAU/USD, H1

Gold remains in a narrow trading range near $2,740 an ounce, as participants adopt a wait-and-see approach pending clearer election results. The precious metal‘s upward potential remains strong, as even a modest move to the upside could push gold to new highs, especially with this year’s trend of record-setting prices. Last week, gold reached $2,790.10 an ounce, and with political uncertainties lingering, investors may look to gold as a hedge.

Gold prices are trading flat while currently testing the support level. MACD has illustrated increasing bullish momentum, while RSI is at 51, suggesting the commodity might extend its gains since the RSI stays above the midline.

Resistance level: 2755.00, 2775.00

Support level: 2735.00, 2720.00

BTC/USD, H4

Bitcoin held steady, maintaining its largest gain in the past week just below the $70,000 mark, which is less than 6% off its all-time high from March. Given that both Trump and Harris have expressed support for crypto assets, Bitcoin is likely to retain its favorable standing, with investors possibly seeing continued stability or appreciation in response to the outcome.

BTC/USD is trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 66, suggesting the crypto might extend its gains since the RSI stays above the midline.

Resistance level: 71855.00, 73400.00

Support level: 69950.00, 66860.00