US Midterm Elections: Trading Opportunities for Gold, USD & NASDAQ? AUDUSD Falls After RBA Decision

Good day, Team GCI.

Typically, US elections are easy to trade.

Normally, just after the election, a Republican win signals a stronger USD, weaker gold and higher indices, with a Democrat win doing the opposite.

Will that happen this time?

In today’s Market Outlook, let’s take a look at Forex trading on GBPUSD, NZDUSD, AUDUSD, AUDCAD, EURUSD, Gold, XAUUSD, WTI Crude Oil, the S&P500, the Dow Jones Industrial Average, and the NASDAQ.

Just a reminder that these videos are intended as observational and educational, and are not to be considered as trading advice.

You would think that we would see the same again but many analysts feel that all this has been priced in as it looks almost certain of a Blue Wave or a Democrat win of the US House and Senate.

For example, the NASDAQ has been falling for a month now as the equities markets have figured out that the return on AI investments may be a long way off or non-existent.

Also, if Democrats control the US Congress, they may kill or delay AI data centre projects as they use a huge amount of resources like electricity and water, which communities need.

We are seeing the same thing with the S&P 500.

However, the Dow Jones Industrial Average looks a bit healthier as, for example, a democrat win could see a lowering of inflation. How? You might ask.

A Democratic Congress may have the power to end the war in Iran, thereby lowering the price of crude.

Also, they may be able to quash the insane tariffs, thereby decreasing uncertainty in the equity markets.

If they do that, bond yields may fall, thereby weakening the USD, affecting all pairs like EURUSD, USDJPY, etc., where we see ranging markets.

We see USD weakness already in some pairs like USDCAD, USDCHF, and GBPUSD.

Of course, if USD weakens, that doesn’t automatically mean that gold will rise.

If the indices are in a risk-on mood, the need for safe-haven assets diminishes.

Of course, a Democrat run Congress means that they will be in direct opposition to the executive branch, which will probably result in more conflicts and stalemates, thereby spooking the markets again.

Unfortunately, as you can see, there is no easy answer this time.

Getting back to reality, this morning, the RBA voted to lower interest rates as expected, and all AUD pairs moved as expected.

We are watching AUDCHF…and AUDCAD as price action is at support so we will look for a break or a bounce.

Later today, watch out for opportunities with NZD pairs with Employment figures.

Thursday we have a UK interest rate decision, where we expect a rise, and the US Non-farm payrolls and Canadian employment figures on Friday.

We will take a look at those in our next video.

That’s all for now.

CFDs and FX are leveraged products, and your capital may be at risk.