Pre-Game (Election Week)

Alright, this is the week of all weeks—US election, FOMC, RBA, and BOE, plus the usual weekly and monthly data releases.

First off, we're keeping things conservative for now, but I’ll share a trade that present favorable risk profiles for you to consider. Just for full transparency, I’ll be staying flat on election day.

"Successful trading is about managing risk and embracing uncertainty."

— The Best Loser Wins by Tom Hougaard

Right now, it’s a coin flip—the uncertainty is just too high to effectively manage and contain the risks.

For the moment, I’m sharing a single trade idea (see below). After the election, I’ll look to add and actively manage more trades.

Long: AUD (trade only in small and likely close pre election outcomes)

With the US continuing to cut rates while the RBA holds firm on its higher-for-longer stance, the interest rate differential is narrowing. China hasn’t hit a breaking point and likely has already priced in a bottom, signaling potential economic recovery from here. In short, demand for Australian commodities should gradually increase, and the Australian economy presents strong value as its rates look attractive on a relative basis.

Stay nibble, keep the powder dry for the next stage of macro.