The US dollar fell nearly 0.4% at the beginning of the Asian session on Wednesday, Monday (November 4th), giving up most of last Friday's gains as investors prepare for a potentially crucial week for the global economy; This week, the United States will hold presidential elections, and the Federal Reserve may cut interest rates again, which will have a significant impact on bond yields.

Non US currencies generally rose at the beginning of the session, with the EUR/USD rising 0.4% to $1.0876, but facing resistance around $1.0905; The US dollar fell 0.6% against the Japanese yen to 152.00 yen. The US dollar index is currently down 0.42% to 103.88.

The support rates of Democratic candidate Harris and Republican candidate Trump in the polls are evenly matched, and the outcome may not be announced until a few days after the voting ends.

Analysts believe that Trump's policies on immigration, tax cuts, and tariffs will put upward pressure on inflation, bond yields, and the US dollar, while Harris is seen as a candidate with policy coherence.

Traders suggest that the initial decline of the US dollar may be related to a highly regarded poll. The poll showed Harris unexpectedly leading Iowa by 3 percentage points in support, largely due to her popularity among female voters.

People generally believe that Trump's victory will benefit the US dollar, although many believe that this result has already been digested, "said Chris Weston, an analyst at brokerage Pepperstone. Trump's presidency and complete control of Congress may have the greatest impact, as people will expect a significant sell-off of US bonds, leading to a surge in the US dollar

He stated that Harris' victory and separate control of Congress by both parties are expected to lead to a rapid reversal of the 'Trump deal'. The US dollar, gold, and US stocks are expected to decline

The uncertainty of the US election results is one of the reasons why the market believes that the Federal Reserve will choose a regular 25 basis point rate cut on Thursday instead of another 50 basis point cut.

Interest rate futures suggest a 99% chance that the Federal Reserve will lower interest rates by 25 basis points to 4.50% -4.75%, and an 83% chance of a similar magnitude in December.

Last month, there was an increase of 12000 non farm jobs, far below the 113000 expected by economists. But analysts believe that the main reason for poor employment performance is the Boeing strike and the impact of two hurricanes in the southeastern United States, which have temporarily unemployed tens of thousands of workers, as well as the low employment rate masking the true state of employment in the United States.

About 512000 people reported being unable to work due to severe weather, the highest number in October since the US Bureau of Labor Statistics began tracking this number in 1976.

The unemployment rate remains at 4.1%, which is at a relatively low level by historical standards.

But the report also has shortcomings. The report shows that finding a job after unemployment may become more difficult, with the average unemployment time increasing from 20.6 weeks in September to 22.9 weeks. The labor force has also decreased by 220000, and after downgrading reports from previous months, the average monthly increase in employment over the past three months is currently about 104000, far below the number of people most economists estimate is needed to keep up with population growth driven by immigration.

Goldman Sachs economist Jan Hatzius said, "We expect to cut interest rates four times in a row in the first half of 2024, with a final rate of 3.25% -3.5%, but there is more uncertainty about the pace and final rate next year. Our baseline forecast and probability weighted forecast are now more dovish than market pricing

The Bank of England will also hold a meeting on Thursday and is expected to cut interest rates by 25 basis points, while the Swedish central bank is expected to cut interest rates by 50 basis points, and the Norwegian central bank is expected to remain inactive.

The Reserve Bank of Australia held a meeting on Tuesday and is expected to maintain interest rates unchanged again.

After the Labour government announced its budget last week, UK government bonds experienced a significant sell-off and the pound also fell, which complicated the decision of the Bank of England.

At the beginning of Monday trading, the pound rose 0.36%, recovering some lost ground and closing at $1.2963, still some way from last week's low of $1.2841.

On Monday, Tokyo was on holiday, so there was no spot trading of US Treasury bonds.

There is not much data available in the United States today, but more importantly, factory orders and risk appetite are leading the trend of the US dollar.

From a technical perspective, the 5-day, 10 day, and 21 day moving averages of the US dollar index are consolidating, momentum indicators are breaking away from their highs, and the 21 day Bollinger Bands are contracting - the daily chart shows a neutral trend.

The initial resistance is at last week's high of 104.63 and July 30th high of 104.79.

If the closing price is lower than the 21 day moving average of 103.63, the trend will be bearish and fall towards 102.91, which is the 38.2% retracement level of the September/October increase.

(Daily chart of US dollar index)

USD/JPY fell from the opening of 152.95 to 151.93, and the Japanese financial market was closed on Monday; Reduced liquidity.

Traders believe that there is further downside potential before the 200 day moving average support level of 151.57. There may be a lot of buying near the 200 day moving average and 100 day moving average of 150.37.