This outlook contains information correct as at 1500hr on 03 Nov 2026
The US midterm election takes place against a background of wars in the Middle East and Europe, an AI race between America and China and economic problems in the US. The housing market has been hit by the return of 7% mortgage rates, inflation is still above the Fed’s target, diesel is in short supply, and October 2026 gasoline prices are estimated to be higher than about 99% of weekly observations since 1990.
Voter disappointment is turning once solid Republican states into battlegrounds, with President Trump’s latest approval rating dropping to 32%. The Economist magazine’s prediction model suggests Democrats have a 94% chance of taking control of the House and a 53% chance for the Senate. If Democrats take full control of Congress, the outcome could have an impact far beyond America’s borders. If Mr Trump becomes a lame-duck President, he could react in unpredictable ways at home and in foreign policy, which would negatively affect the world.
In a split 10-2 decision last week, the FOMC left the Fed Funds Target Rate unchanged at 3.75%-4.00%. It affirmed inflation remains elevated and the “accumulation of more information” will guide future policy decisions. Overall, the tone remains hawkish. Chairman Warsh described the economy as strong, consumer spending and capital expenditure as healthy, with labour market conditions positive, but stressed inflation remains too high. Looking forward, the Fed will reduce rate-setting meetings from eight to seven in 2027 and down to six in 2028. The outlook is likely for two additional rate hikes, one in December 2026 and another in Q1 2027, thereafter on hold for the rest of 2027.
US Stocks took a beating at October’s close, with the tech-heavy Nasdaq 100 capping its worst month since 2025. Prominent names such as Intel dived 29%, the most in over four decades; the news came after Alphabet’s biggest-ever market plunge on Thursday, 29th Oct, wiping half a trillion USD in market value. Stocks are not out of the woods yet.
Close 30 Oct Close 2 Nov
Long-term Treasury yields climbed in October to their highest since 2002; the 10-Year yield hit 5.31% and the 30-year 5.67%, causing concern among financial observers. However, Hedge Funds and private investors bought record amounts of new US Treasuries at auction. Primary dealers (Banks), which must bid at every auction, were left with just 2.5% of the 10-year Treasuries and 2.2% of the 30-year Treasuries at the latest auctions; the smallest share on record since 2003. Bond Fund manager PIMCO said it is warming to longer-dated bonds as their yields rise. In our October Insight, we posit that if investors are happy with current long-term yields, “then it is a good time to buy US long-term Treasuries”.
The Crypto world was shaken as Binance, the world’s largest cryptocurrency exchange and the equivalent of a global stock exchange for cryptos, was hacked. On Thursday 29 Oct during New York trading hours, a string of unusual transactions began that alarmed Binance as USD6.3 bln worth of cryptocurrencies were siphoned off; a multibillion USD deluge of digital coins was gone in the next 20mins. TRM Labs attributed the heist to an elite North Korean hacking unit called TraderTraitor. The FBI later confirmed their findings that the North Koreans had executed the largest crypto robbery to date.
Tanker tracking data compiled by Bloomberg and other energy analytics firms show combined exports from Saudi Arabia, the UAE, Iraq and Kuwait climbed by 10% to 15.53 million barrels a day in October. This is roughly in line with levels shipped before the US-Israel / Iran War. WTI hit an October high of USD104.00 last Friday but dived USD10 over the weekend on talks between Iranian and Qatari officials on ending the US-Israeli war with Iran.
Overnight, US 10-Year Treasuries closed unchanged at 4.91% (6 Oct 5.31%), Australian 10-Year Govt Bonds closed up 0.01% at 5.14% (6 Oct 5.40%) and Euro 10-Year Bonds closed down 0.03% at 3.29% (6 Oct 3.49%).
The USD index DXY has eased to 101.85 today from its 102.94 high in October. The Index remains above 100.00, reflecting USD resilience due to expected higher US interest rates and geopolitical uncertainties.
Sources: Bloomberg, MSNBC, Reuters, Morningstar, Business Times, 03 Nov 2026
September headline inflation accelerated to 4.3% YoY (Aug 4.0% YoY), but underlying inflation (Trimmed mean) remained stable at 3.6% YoY, although Aug was revised up to 3.5%. Nevertheless, inflation remains above the RBA's 2%-3% target range. As expected, the RBA raised the OCR by 0.25% to 4.85% at its MPC meeting on 3 Nov, which may be its last increase this year. The rate increase may not provide much support for AUDUSD.
AUDUSD found support at 0.6900 and broke above Resistance at 0.7000, but it appears to be losing momentum. We maintain that the bearish Shoulder-Head-Shoulder pattern should still be dominant. There is a strong chance AUDUSD may break below the Neckline and head towards the technical objective at the 61.8% Fibonacci Support Zone of 0.6460 – 0.6600.
EURUSD
As expected, the ECB left all three key policy rates unchanged at its 29 Oct meeting. The deposit facility, main refinancing operations and marginal lending facility rates remain at 2.50%, 2.65% and 2.90%, respectively. The decision appears to be a "hawkish hold". Markets expect one final 0.25% hike in December. EURUSD continues to be weighed down by the recent widespread anti-government protests in France and a worsening fiscal outlook, with French 10-Year borrowing costs reaching 24-year highs.
The early departure of ECB Head Christine Lagarde on 7 Feb 2027, plus political uncertainty over France’s presidential election in 2027, should continue to weigh down the EUR into and during 2027.
In October, EURUSD continued its consolidation above the Support Zone at 1.1000 – 1.1150. We maintain our view for EURUSD to break through and below this zone.
Image Source: Bloomberg 03 Nov 2026
GBPUSD
Markets are pricing in a 0.25% rate hike by the Bank of England at its next meeting on 5 Nov, according to LSEG data. This appears to be providing some support for GBPUSD.
GBPUSD did not behave as expected; instead of breaking down, it found Support at 1.3200 and has rallied to try and break above Resistance at 1.3400. We expect the rally to end soon and keep our view for another test down to 1.3200.
Image Source: Bloomberg 03 Nov 2026
USDJPY
At its latest Monetary Policy Meeting on 29 - 30 October, BoJ left its policy rate unchanged at 1.25%. It stated underlying inflation had reached its 2% target, but Governor Ueda kept the door open for further tightening. Markets interpreted the decision as a "hawkish hold", signalling that further tightening remains possible. The next scheduled MPC will be on 17 - 18 December. USDJPY should trade sideways into 2027.
Japan's population fell 2.5% between 2020 and 2025, the fastest decline on record since 1920. BoJ acknowledges a shrinking population will mean lower consumer spending and less robust economic growth, indicating less pressure on interest rates.
We maintain our view that USDJPY will likely be trapped between 154.00–160.00 into year-end, with a slightly bullish tilt as Forex markets continue to probe the top side.
Image Source: Bloomberg 03 Nov 2026
USDSGD
At its October Monetary meeting, the Monetary Authority of Singapore maintained the prevailing slope of the S$NEER policy band (estimated at 1.25% p.a.), contrary to market expectations of further tightening. GDP growth for 2026 is forecast at 5.7%. The SGD is expected to remain strong against other currencies.
USDSGD is still testing Resistance at 1.2800 and is expected to end. We maintain our view for USDSGD to move lower again to test the 1.2600 Support. Thereafter, we might see range trading between 1.2600–1.2800 to year-end.
Image Source: Bloomberg 03 Nov 2026
AUDSGD
AUDSGD found Support between 0.8800 – 0.8930 but couldn't stay above 0.9000. AUDSGD is likely to move lower again to test and possibly break the 0.8800 Support in the coming weeks.
Image Source: Bloomberg 03 Nov 2026
XAUUSD
The Death Cross is still in action, and Gold has decisively broken below the psychological Support at USD4,000. We might see consolidation between USD3,800–USD4,000 in November. XAUUSD should then head to the next Support at USD3,440 and probably end 2027 at its lows.
Image Source: Bloomberg 03 Nov 2026
Note: In the Candlesticks Chart, Green bars mean the Close is higher than the Open price, and Brown bars mean the Close is lower than the Open price