04.11.2020: First results of US election; outlook for USDX, USD/JPY, AUD/USD, NZD/USD

Today the most anticipated event of this year, namely the US presidential election, has finally taken place. As highly expected, the announcement of the final results is delayed. While votes in mail-in ballots are being counted, the market sentiment has changed from the positive to the negative one.

In fact, the majority of forex experts forecast a spike in volatility across the markets at the time of the announcement of preliminary results. Their predictions turned out to be true. After the information about the small gap in the number of votes between the candidates, the US dollar index, which measures the strength of the greenback against a basket of six major currencies, hit its monthly high of 94.00. Such an increase indicates the risk-off sentiment in the market.

Biden has 225 votes and among swing states, he has won Arizona, while Trump gets 213 votes and he has won Florida. So, a draw looks also possible. Investors are keeping an eye on the events in the Senate. Democrats are trying to reclaim control of Congress, yet they have faced a tough challenge.

The stock market is also highly volatile amid the uncertainty. The quotes of the major US securities are like a roller coaster: they either fall or rise sharply. The dollar/yen pair reached a 2-week high, fixing at 105.20. If not for market turbulence, it could rise to the target level at 106.10.

However, the yen has escaped a deeper decline amid positive news. The Bank of Japan unveiled its minutes from the last meeting. Central Bank Governor Haruhiko Kuroda said that the regulator would focus primarily on pumping liquidity to cash-strapped firms affected by the pandemic.

The trajectory of the Australian dollar is also unpredictable due to high volatility. Its trading range is limited by the 0.7200 and 0.7058 levels. It is not recommended to enter the market until the final results of the US presidential election are announced.

Traders are also closely watching the movements of the NZD/USD pair. Excluding the growth of the US dollar as a safe-haven currency, the Kiwi lost ground amid the negative labor market data for the third quarter. The unemployment rate rose to the highest level in the last 4 years. If the pair tumbles below the levels of 0.6620 and 0.6600, it will resume its downward movement.

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