The USD/SGD currency pair extended losses on Tuesday as US presidential election day put markets on edge.

According to Pepperstone’s Michael Brown, a victory for Donald Trump would likely prompt market players to focus on reflation, anticipated tax cuts and potential tariffs.

“Initial market reactions may include USD gains, especially against currencies at risk of tariffs, and Treasury downside, particularly at the long end of the curve as growth and inflation expectations rerate upward,” Brown said.

A victory for Kamala Harris could lead to weaker US Dollar, as Trump-linked hedges unwind.

An opinion poll over the weekend showed a surprise lead for Harris in Iowa, which is a traditional Republican stronghold. However, as a whole, polls continue to show a tight contest.

The Federal Reserve’s monetary policy decision will be another highlight this week.

The Fed is widely expected to cut its federal funds rate target range by 25 basis points to 4.50%-4.75% at its November meeting.

In September, the Fed began its monetary easing cycle with an out-sized rate cut (by 50 bps), which has been the first reduction in borrowing costs since March 2020.

The US central bank indicated confidence that inflation was moving sustainably toward the 2% target and took action to prevent a slowdown in the labor market.

Yet, the minutes of the latest FOMC meeting showed Fed officials were uncertain about the extent of interest rate cuts. Ultimately, only Governor Bowman voted against the 50 bps rate cut, while favoring a 25 bps move.

Meanwhile, data out of Singapore showed retail sales had increased 2% year-on-year in September, picking up from a 0.7% YoY rise in August. It has been the strongest retail sales growth since May.

As of 8:37 GMT on Tuesday the USD/SGD currency pair was edging down 0.13% to trade at 1.3178.

The exotic Forex pair has eased from a 12-week high of 1.3264, which it registered on November 1st.