Daily Forex Report 08-Nov-2022: US Dollar down against GBP as mid-term elections gear up

Euro bulls eye parity opportunity on a weaker US Dollar Index

A lot of noise is being made about the mid-term elections in the US, but regardless of outcome, fiscal policy is unlikely to be affected; the Federal Reserve will charge along with its inflation-driven rate hikes whether the chambers turn red, blue or gridlocked.

But the greenback weakened in anticipation of the result anyway, with GBP/USD adding 1.5% in yesterday’s session.

Cable has drawn back 0.4% to US$1.147 in this morning’s Asia session, with no clear path laid out for the day.

GBP/USD: A bullish opportunity amid mid-terms furore? – Source: capital.com

However, Michael Wilson, the top-ranked strategist at Morgan Stanley, expects an equities rally if polls prove accurate and the Republicans secure at least one chamber.

That could come at the expense of the Dollar Index (DYX), which at 110.54, is already weaker against the five-day period.

Today could be an opportunity for euro bulls to push EUR/USD back above parity – where it’s temptingly close – should sentiment turn against the greenback.

Parity was briefly touched toward the end of yesterday’s session, but the bears pushed the pair back down to its current exchange price of US$0.999.

Sterling is currently going for 87.09p against the euro after a bearish performance yesterday following a monthly fall of -0.4% in the Halifax House Price Index.

Today’s economic calendar is pretty clear, apart from Euro Area retail sales which are expected to show a -1.5% decline year on year.

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