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Australian Dollar reaches 6 week high amid greenback weakness

AUD - Australian Dollar

Thursday’s session saw the Australian dollar rise to a 6 week high as the greenback fell 0.7% through trade. AUD/USD ascended from 0.7170 to 0.7276 as global equities pushed higher as vote counting continued in the US. The New Zealand dollar also benefited from greenback weakness, with NZD/USD rising from 0.6700 to 0.6769. Despite this, the Australian dollar strength saw AUD/NZD rise about 50 points from 1.07 to 1.0750.

Looking to the day ahead, we will get updated growth forecasts from the RBA in the form of the November monetary policy statement. Across the pond we will have RBNZ inflation expectations for November which are expected to maintain the trend of low inflation. Offshore, we have industrial production data out of Germany as well as US employment data which is expected to show a slow down in employment growth and a stabilizing unemployment rate.

The Australian Dollar will continue to trade on developments out of the US election with overnight moves paving the way to a move above 0.7300 before 0.7345.

Key Movers

As we touched on above, risk currencies continue to benefit as financial markets view the predicted election results in the US favorably. With Biden’s odds of winning now at 86%, equity markets surged overnight as more votes were counted with the USD falling considerably across the board.

Although Trump has tweeted that he is planning a legal challenge, the way the market has reacted means that this threat is not seen as credible by investors. In monetary policy news, the Bank of England elected to maintain their current policy rate at 0.1% however the big surprise came in the form of an expansion of its bond buying program.

Expected Ranges

AUD/USD: 0.7060 - 0.7345 ▲

AUD/EUR: 0.6100 - 0.6200 ▲

GBP/AUD: 1.8000 – 1.8130 ▼

AUD/NZD: 1.0700 - 1.0800 ▲

AUD/CAD: 0.9440 - 0.9560 ▲