Hampered EUR & GBP on Dovish ECB & BoE

 The world-concerned US presidential election is about to be held within less than a week. Before the reveal of the Biden family‘s corruption scandal, I believed that Joe Biden was certain to win with a 17-point lead over Trump. But the situation is different now as Biden’s approval rating remains skewed to the downside with an only 7-point lead.To get more news about WikiFX, you can visit wikifx official website.

　　Polls are only acceptable as a reference because the US presidential election adopts the Electoral College system. In October four years ago, the US media reported that the Democratic presidential candidate Hillary was comfortably ahead of Trump with a 12-point lead. Although almost all media at home and abroad predicted that Trump was doomed to failure, the result surprised all. More than the shock victory, Trump even held 306 votes compared to 232 votes for Hillary. Besides, the Republicans also take full control of Congress, which surprised the world.
The situation now is more complicated than four years ago, making it hard to predict who will host the White House and which party will control Congress. The rise of risk aversion in financial markets seems inevitable under such uncertainties, as evidenced by the sharp decline of US stocks yesterday. In this case, next weeks DXY and Japanese yen are hopefully to be bullish.

　　In the face of uncertainties over the US election, there will be a few policy-setting meetings of central banks, which are scheduled as October 28 for Canada, October 29 for Japan and Europe, November 3 for Australia, and November 5 for the UK. Besides Japan, all of Canada, Europe, Australia, and the UK are likely to ease monetary policy by taking further actions such as doing more QE and adopting negative rates. Therefore, with the DXY poised for upsides, the Canadian dollar, the euro, the Australian dollar, and the British pound are more likely to be hampered under the monetary easing policy.

　　Moreover, while beleaguered by negatives such as the resurgence of the pandemic in Europe and the uncertainties in EU-UK trade talks, the euro and pound are just in the face of increasing risk aversion. Thus the two currencies are expected to receive more downside pressure in the following week.