Investors are on high alert as markets prepare for the upcoming U.S. election and a slate of critical economic data releases that could shape the Federal Reserve’s next interest rate decision. With polls indicating a tightly contested race between former President Donald Trump and Vice President Kamala Harris, market participants are weighing the potential impact on equities, cryptocurrency, and housing costs. A Trump victory is generally expected to bolster stocks and Bitcoin, while a Harris administration could ease housing affordability slightly. Both scenarios, however, are expected to add pressure on deficits, stoke inflation, and temper the pace of Fed rate cuts—factors likely to drive up the U.S. dollar, posing challenges for Asian markets reliant on stable currency flows.
In currency markets, the yen gained after Japanese Prime Minister Shigeru Ishiba pledged to restore stability following his coalition’s loss of a parliamentary majority. This political uncertainty, coupled with a tightening Japanese labor market, underscores the importance of the Bank of Japan’s policy decision due later this week. Data showing labor constraints in September are seen as pressuring companies to raise wages, a potential inflection point as the BOJ weighs its stance.
Meanwhile, oil prices steadied following a dramatic drop on Monday the steepest in over two years as investors monitor developments in the Middle East for signs of easing tensions. Gold continued its upward trajectory, edging closer to record highs amid the safe-haven demand bolstered by both geopolitical risks and shifting economic expectations.