MARKETS SPECTATOR: Line ball rates call

US indices hovered around the flat line on Tuesday as investors sat on their hands ahead of tonight's US presidential election, which is set to be one of the closest in recent times.

With half an hour left to trade, the technology-laden NASDAQ is the best performer – up 0.37 per cent – while both the S&P 500 and Dow Jones Industrial Average are 0.05 per cent firmer.

There's just too much uncertainty for participants to take one view or the other. Hopefully we see a quick result to the election and the market can move on to dealing with the next issue, which is the fiscal cliff. If it's really tight and it takes days or weeks to determine a winner then I don't think the market is going to like it at all.

Any extra uncertainty is simply going to detract from getting the fiscal cliff sorted out.

So looking ahead to the Australian session and unfortunately I think its going to be a very lacklustre session ahead of the major event of the day, the November interest rate decision from the RBA.

Currently it looks like the local bourse will open around the 4450 level, which is about 7 points lower than where it closed yesterday. With plenty of participants away from their desk due to the Melbourne Cup holiday, there's likely to be less volumes going through the market, which can potentially exaggerate any move.

Like we saw in October, it's going to be a line ball decision from the Reserve Bank. As October developed and global and domestic data picked up across the board, the chances for a Melbourne Cup day rate cut slid. It had been as high as 72 per cent in early October but as of yesterday that was down to 52 per cent, according to interest rate markets.

That doesn't seem to have influenced the economists though, with 20 of 26 surveyed predicting a 25 basis point cut to 3 per cent, equal to levels seen during the GFC.

So it looks like its going to be a relatively quiet day ahead of the 2.30 AEDT interest rate decision and then tonight's US presidential election.