Daily Currency Update

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Election Day

AUD - Australian Dollar

The Australian Dollar surged overnight on expectations the Democrats and Joe Biden will win the 2020 Presidential election. Polls suggest the former Vice President maintained his commanding lead into election day and while key swing States are still up in the air markets appear to be front running the result, prompting a surge in risk demand, on hopes of a robust and sizeable fiscal stimulus program. Equities surged; recouping losses suffered in last weeks sell off while dragging the AUD higher. Having touched intraday lows at 0.7025 in the aftermath of the RBA policy announcement the AUD rallied one and a half cents overnight to touch daily highs at 0.7175. Markets largely ignored the RBA’s policy announcement having priced in the 15 basis point rate cut and $100 billion QE program. In an ironic twist the RBA policy move was designed to drive the AUD lower, amid hopes it will help support Australian Exports through the recovery. The muted response and overnight surge illustrate the importance of sentiment in the current environment.

Attentions today remain squarely affixed to the US election with results likely delayed by a record number of pre-polled ballots. If Biden carries the day and looks set to comfortably beat the incumbent we anticipate risk demand will continue to drive AUD gains and test resistance at 0.7230. If however Trump can secure wins early in key swing States volatility will increase and trade will become choppy until a clear winner is known.

Key Movers

The US dollar fell across the board overnight as markets price in a Democrat Election sweep. Investors appear to be front running the election result driving risk appetite on expectations a Biden/Harris White House will deliver big on Fiscal stimulus and repair trade tensions. The dollar index fell half a percent to 93.55 as the Euro bounced off supports to surge back through 1.17. The single currency has come under pressure in recent days as COVID-19 lockdowns extinguished hopes for Q4 economic recovery. Having touched 1.1620 the Euro appeared poised for a break below support but a blue wave and surge in risk demand should ensure a stay of execution as recent safe haven moves that propped up the world's base currency are unwound.

Our attentions remain squarely affixed to the Presidential race with direction solely governed by results as they filter through. A clear Biden win will support further improvements in risk sentiment and likely dampen demand for the USD while a surprise Trump win will ensure a swift correction of overnight moves and heightened volatility.

Expected Ranges

AUD/USD: 0.6950 - 0.7320 ▲

AUD/EUR: 0.5980 - 0.6180 ▲

GBP/AUD: 1.8080 - 1.8420 ▼

AUD/NZD: 1.0610 - 1.0750 ▲

AUD/CAD: 0.9280 - 0.9480 ▲