Under the dual influence of a declining US dollar index and the uncertainty of the US election, the offshore RMB exchange rate against the US dollar rebounded strongly, with the market demonstrating a preference for non-US currencies. On the morning of November 4th, the offshore RMB against the dollar broke through the 7.10 and 7.09 thresholds consecutively, surging 516 basis points to 7.0878, returning to mid-October's high levels. This rise was primarily driven by the weakening of the US dollar and market sentiment changes triggered by election uncertainty.
Since the weekend, the US election has become increasingly uncertain. According to the latest polls, Democratic candidate Harris and Republican candidate Trump are tied in support rates, with voter intentions still unclear. Particularly in some traditional Republican states, Harris's support rate has unexpectedly risen, breaking the market's general bullish expectation for a "Trump trade." Foreign analyses suggest that a setback in Trump's election prospects could weaken the dollar's strong performance, while a Harris victory could more likely result in long-term dollar weakness.
Amid an unstable global macro environment, the market has shown signs of locking in gains early. A report from Citibank pointed out that as the election approaches, investments related to the "Trump trade" have entered a profit-taking stage. Historical data shows that in similar election events, major asset price fluctuations mostly occur before the election, with early profit locking being a strategy to hedge against market uncertainty.
Since the opening on November 3rd, the US dollar index has significantly fallen, dropping from 104.31 to 103.62, with non-US currencies generally strengthening. The dollar has depreciated by 0.3%-0.8% against currencies such as the RMB, yen, Canadian dollar, and Swiss franc. Market expectations for Trump's victory have weakened. Analysts believe that even though some recently released economic data is favorable to the dollar, election risks and increased global macro uncertainties have diminished the dollar's rebound potential.
In the coming period, the market focus is expected to remain on the US election results and their potential impact on the dollar. Experts anticipate that the bidirectional volatility of major currencies such as the dollar and RMB may intensify, with the market continuing to pay close attention to US political developments and their uncertain impact on the global economy.