US Midterm Elections Impact: Crude Oil Crashes, USD Weakens & Dow Jones Rallies? GBP in Focus

Good day, Team GCI.

In our last video, we looked at the opportunities based around the US Midterm Elections, and we saw some interesting results.

Let’s start by looking at this big fall in the price of crude oil.

I’m Brad Alexander, and in today’s Market Outlook, let’s take a look at Forex trading on GBPUSD, USDCAD, NZDUSD, the NASDAQ, the Dow Jones Industrial Average, Brent and WTI Crude Oil.

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

One of the main items that gave US Democrats the Blue Tsunami this week was the illegal war in Iran and the huge inflation problem that it caused.

So, with this optimism, the prices of WTI and Brent Crude fell, breaking this 2-month-old double top.

We can see that the price of WTI is at a key level of $87, so we need to see a break below and some good news before we get back to normal levels.

We see a similar situation with Brent Crude at $97, which means a price differential of about $10, which is still higher than normal, but better.

We predicted that the NASDAQ would fall with a Democratic win, as this would put most AI data centres in jeopardy.

It did, but the fall in oil prices and the idea of stability in the US Congress encouraged investors.

The S&P 500 behaved in the same way.

But look at the Dow Jones Industrial Average.

This index and its component companies are very susceptible to the price of oil, crazy tariffs, and interest rates, so investors suddenly became interested again in blue-chip companies.

The question is, will all the US indices catch up to each other and stabilise as we look at their all-time highs?

Keep in mind, though, the main tool that the new Congress will have to end the war is to cut the funding, but they will not have that power until January.

As we said in the last video, a Democratic win usually means a weaker USD and that was true this time.

But the fall in oil prices, meaning lower inflation, and the sudden shift to equities, as we saw in the Dow Jones Industrial Average chart, also had a huge impact on USD.

This weaker USD might change tomorrow with the US Non-Farm Payrolls, as the Fed will need this data.

They are still considering an interest rate rise next month, which will strengthen USD.

GBP, on the other hand, is quite strong based on the projected interest rate rise today.

GBP is high in every pair except GBPCHF, which has been in a ranging market for one month.

Even though the price of WTI has fallen, CAD is strong against everything except CHF.

The Democratic sweep may mean the end of the trade war in the next few months, and there are many other factors keeping the Loonie strong.

But watch out for Canadian employment data tomorrow.

And expect volatility in NZD when the markets open on Monday, after the elections on Saturday.

That’s all for now.

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