Election

The Nasdaq 100 is bouncing off 50-day EMA support – key resistance looms at 20K, with support at 18,900 and 18,400.

Whether it is Biden stepping aside or Trump grabbing headlines with policy hints, it is difficult to see US politics taking a back seat next week. Fed watchers have the US PCE inflation report to look forward to, and global central bank watchers have flash PMIs. The BOC are expected to cut rates, but will they signal more next week?

At a high level, the US dollar has not shown a consistent trend of strengthening or weakening in one month before, one week after, one month after, or one quarter after US Presidential Election days over the last 10 elections.

EURUSD Outlook: Despite the bearish impact of political and economic uncertainty in the EU, EURUSD is holding at a bullish end amid Fed rate cut bets

Following a mixed US non-farm payrolls report, the US dollar fell, boosting metals and tech stocks like MSFT, AAPL, AMZN, and META to new highs. European indices dropped ahead of the French vote, limiting the euro's gains. The EUR/USD forecast may change based on the French vote outcome, while the upcoming US CPI release could influence the likelihood of a September rate cut.

Traders will keep a close eye on the outcome of the second round of the French elections at the Asian open next week, as it could have a direct impact on European markets. Given that the far right failed to secure a majority government, there are upside risks for the euro if they do not perform as well as currently expected. Jerome Powell will also address the Senate Banking Committee ahead of a key inflation report next week. Both events have the potential to shape policy expectations for 2025. NZ dollar traders should closely monitor the RBNZ meeting to see if they maintain the hawkish stance that surprised markets in their prior meeting.

Today, millions of UK citizens are heading to polling stations to vote in the general elections, while the US is out celebrating Independence Day. Then it is all about the French legislative election on Sunday, which can arguably have a bigger influence on the FTSE 100 forecast than the UK vote today.

Mainstream parties are now devising strategies to prevent the far-right party from achieving an absolute majority, while Marine Le Pen will also be seeking support from beyond her RN party should it fall short of an absolute majority in Sunday’s legislative elections. Consequently, French politics will remain in the spotlight for the rest of the week.

The euro was under pressure in the first half of Wednesday’s session, ahead of the French snap election and due to growing signs of weakness in Germany’s economy. This political uncertainty has bolstered the US dollar, especially against currencies where the central bank is more dovish or where interest rates are significantly lower than the US – for example the Japanese yen.

The countdown to 4th July, election day is on, and the polls have broadly continued to show the same pattern we've seen across the course of the election campaign: Labour retaining their lead of around 20 points above the Conservatives. Here, we take a look at what a Labour win could mean for the pound and FTSE index.

Inflation reports are the main theme for next week, with figures set to be released from the US, Canada, Australia and Japan. EUR/USD traders might want to be on guard for headline risk surrounding French elections, as it is the last full week before votes are cast and that means polls could easily sway sentient for European markets.

Why might the Fed cut rates in July? Inflation is running below the Fed’s target with timely measures of shelter inflation, jobless claims are ticking up, monetary policy is tight per the Taylor Rule, and the election is looming.

The US dollar has been little-changed so far this week, after starting the week moderately lower on Monday following a two-week rally and turning slightly higher today against a basket of foreign currency. The highlight of the day is the May US retail sales data.

GBP/USD remains in a longer-term uptrend ahead of the UK election, so traders may be keen to buy any dips toward the 50-day EMA near 1.2600 this week.

At the time of writing, the race to the Senate is close yet Republicans lead the race to the house during the mid-term elections.

The ASX200 has given back over 50 points of early gains to be trading flat at 7145 at 3.00 pm Sydney time.

As both polling and betting markets correctly predicted (this time), the Australian Labor Party (ALP) has claimed victory in the 2022 Federal Election, the first time in 9 years Labor Party has been in power.