Commodity currencies enter November amid a complex web of macro forces. On one hand, a persistent geopolitical premium keeps Brent trading near triple-digit levels, which traditionally supports currencies of energy-exporting countries. On the other hand, uncertainty over the outcome of tomorrow's U.S. midterm elections and Washington's ensuing tariff rhetoric hangs over commodity markets. Against this backdrop, synchronicity across commodity assets has broken down: national central banks have chosen fundamentally different paths, making the interest rate differential the main catalyst of volatility within the bloc.
USD/CAD (Canadian dollar)
Bullish factors for the pair:
- Persisting risks of trade confrontation with the U.S. and the threat of retaliatory tariffs on Canadian industry and the auto sector curb long-term investment in the Canadian economy.
- Cooling of the Canadian labor market and a slowdown in core consumer metrics limit the regulator's scope for further aggressive monetary tightening.
- The dollar's advantage on the yield differential remains so long as base rates in the United States stay higher.
Bearish factors for the pair:
- The Bank of Canada's actual decision to raise the policy rate to 2.50% at the October 28 meeting, supported by comments from Tiff Macklem about readiness to contain secondary effects of energy-driven inflation.
- High crude oil prices, which directly improve Canada's terms of trade and support the current account.
- A pullback in U.S. 10-year Treasury yields to the 5.00%–5.05% area, which has eased the upward impulse of the U.S. currency in USD/CAD.
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Estimated daily range for November 3: 1.3910–1.3990. Breakout targets. If resistance at 1.3990 is broken convincingly to the upside, buyers will look to 1.4045 and the psychological 1.4100. If the price closes below support at 1.3910, sellers will target 1.3850 and 1.3790.
Estimated range for the next few days. Quotes may trade in a corridor of 1.3840–1.4060 in coming sessions. These figures denote probable technical contours around the U.S. elections and should not be treated as a guarantee of price movement or trading advice.
AUD/USD (Australian dollar)
Bullish factors:
- The Reserve Bank of Australia's decision on November 3 to raise the cash rate by 25 basis points to 4.85% (six votes to three on the board) due to elevated core inflation.
- The RBA's status as one of the more hawkish central banks among the Group of Ten, which gives the Australian dollar strong interest rate support.
- Local stabilization of iron ore and non-ferrous metal prices on Asian commodity exchanges.
Bearish factors:
- Modest pace of industrial recovery in China and a still-stuttering construction sector.
- A broad decline in risk appetite on global venues on U.S. election day, forcing large managers to exit high beta currencies into safe havens.
- Risk of renewed USD demand in AUD/USD if protectionist signals strengthen after the Congressional vote count.
Estimated daily range for November 3: 0.6580–0.6660. Breakout targets: an impulsive break above 0.6660 opens levels at 0.6710 and 0.6765. If the price breaks and holds below support at 0.6580, downside targets are 0.6530 and 0.6475.
Estimated range for the next few days. Quotes may fluctuate between 0.6510 and 0.6730. These levels are indicative boundaries reflecting reaction to the RBA decision and are not direct trading recommendations.
NZD/USD (New Zealand dollar)
Bullish factors:
- Additional tailwind from Australia after the RBA's tightening, which could locally lift the closely related New Zealand dollar.
- A slowdown in the rise of U.S. bond yields, reducing the attractiveness of the dollar versus Pacific region assets.
- Technical oversold conditions on NZD/USD daily charts after an extended decline.
Bearish factors:
- The Reserve Bank of New Zealand's vote to keep the rate at 2.75% by a narrow margin (4–3), which disappointed buyers expecting an immediate hike.
- Weakness in domestic consumer demand in New Zealand and risks of a prolonged recessionary process.
- A widening yield gap with Australia and Canada, encouraging capital flows out of the kiwi into AUD and CAD via cross rates.
Estimated daily range for November 3: 0.5590–0.5670. Breakout targets: a break above 0.5670 would expose resistance at 0.5725 and 0.5780. A drop below the support at 0.5590 could lead to 0.5540 and 0.5485.
Estimated range for the next few days. Price action may fit within 0.5520–0.5740. These guidelines merely outline a likely trading band against the backdrop of U.S. political events and do not constitute a specific trading plan.
Trading commodity currencies on U.S. midterm day and during active central bank sessions carries the risk of sharp price gaps and widening spreads. At such times the advantage goes to those who rely on cold calculation rather than emotional attempts to predict winners. A prudent approach today is to reduce position sizes, wait for the U.S. vote count to finish, and avoid preemptive trades without reliable volume confirmation.
Discipline in decisions, cool heads, and profitable trading!
Mark Douglas, a trading psychology expert, said that traders do not survive because they are the smartest but because they are the fastest to admit their mistakes and adapt to change.
