Asia open: A spooky calm

Stephen Innes SPI Asset Management

As investors make their final adjustments before the U.S. presidential election, a spooky calm blankets global markets—a haunting stillness that feels like the calm before a storm. World stocks held steady on Monday, Wall Street gave back some of Friday’s gains, Treasury yields edged lower, and U.S. bond market volatility pulled back from Friday’s one-year high. It’s a deceptive quiet, with traders seemingly holding their breath as the election’s high-stakes drama looms large. Buckle up; the storm is on its way, and it promises to be anything but ordinary.

With positions locked and loaded, it’s time to hit pause on the opinion polls, grab some popcorn, and settle in for an Election Day thriller. This race is charging full speed to the Pennsylvania finish line, with RealClearPolitics showing Trump and Harris neck and neck. But Trump has a minuscule lead in the Keystone state, and the stakes couldn’t be higher—get ready for a nail-biter that promises to keep global markets on the edge of their seats.

With Japanese markets back in action after Monday’s Culture Day holiday, yen trading should get a much-needed liquidity injection. The U.S. dollar took a dip, sliding as low as 151.50 yen before rebounding. Treasury yields retraced some of last week’s surge. Investors have also been unwinding their ‘Trump trades,’ adding to the dollar’s decline against the yen. The 10-year Treasury yield eased to 4.309% from 4.361%, signalling a cautious mood as markets brace for the U.S. election showdown. All eyes are on the next moves, with traders navigating this high-stakes week on full alert.

Meanwhile, crude oil is riding a two-day rally, fueled by escalating tensions in the Middle East. Israeli intelligence reportedly suggests Iran is gearing up to attack from Iraqi territory, potentially even before the U.S. election, according to Axios. Despite Israel’s signal that it’s open to ending the conflict in Lebanon, violence continues to escalate.

Earlier in the session, oil prices were under pressure after the EIA reported U.S. crude output hit a record high in August, climbing 1.5% to 13.4 million barrels per day.

As tensions rise in both geopolitical and political arenas, tomorrow's Asia session is shaping up to be one to watch. Expect the unexpected as markets prepare for a high-voltage Election Day showdown.

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.