The DXY Index depreciated for the fourth day in five sessions by 0.5% to 103.41, below this year’s average level of 103.75. The US Treasury 10Y yield fell a second day by 1.4 bps to 4.27% following Monday’s 10 bps decline to 4.28%, ahead of the 25 bps cut expected at tomorrow’s FOMC meeting. With recent polls signalling a tight race instead of an outright Trump victory at the US Presidential election, markets have pared their bets on Trump’s tax cuts and tariffs plans lifting US inflation and supporting the USD. As witnessed in the 2016 elections that elected Trump, prepare for market swings when the US election results start to roll in.
We cannot rule out a victory by Vice President Kamala Harris. Having learned from the shortcomings of Hillary Clinton’s defeat in 2016, the Democrats are better prepared, evidenced by their enhanced voter outreach and mobilization, unified party platform, robust fundraising efforts, and focus on the swing states to win the electoral college, not just the popular vote. Harris’s plan to increase taxes on US corporations and wealthy individuals while providing tax relief to middle- and lower-income families and addressing price gouging, are considered less inflationary than Trump’s agenda.
The Reserve Bank of Australia’s cautious outlook lifted AUD/USD by 0.8% to 0.6636, around this year’s average level. The RBA is not ready to declare victory on inflation. Although CPI inflation fell to 2.8% YoY in 2Q24, returning to its 2-3% target range, core inflation remained high at 3.5%. RBA signalled it would delay interest rate cuts to 2025. RBA projected core inflation returning to the 2-3% target range in 2H25 and to the 2.5% target mid-point in late 2026. It expects the tight labour market to come into better balance in late 2025, and around that time, it expects the unemployment rate to peak at 4.5%. RBA hinted that the rate cuts would also be shallow. Its estimated neutral cash rate of around 3.50% was not far below the 4.35% cash rate target. The estimate was also based on a cash rate of 4.10% in mid-2025 and 3.50% in mid-2026.
Quote of the Day
“The future depends on what we do in the present.”
Mahatma Gandhi
November 6 in history
In 1999, Australians rejected a referendum to become a republic with a president as its head.
Topic
GENERAL DISCLOSURE/ DISCLAIMER (For Macroeconomics, Currencies, Interest Rates)
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
[#for Distribution in Singapore] This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 11th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
Virtual currencies are highly speculative digital "virtual commodities", and are not currencies. It is not a financial product approved by the Taiwan Financial Supervisory Commission, and the safeguards of the existing investor protection regime does not apply. The prices of virtual currencies may fluctuate greatly, and the investment risk is high. Before engaging in such transactions, the investor should carefully assess the risks, and seek its own independent advice.