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Aussie holds gains at multi-week highs above 0.7250

AUD - Australian Dollar

The Australia Dollar closed well in the positive last week, up 3.27% to 0.7263 as the US election dominated currency movements. With President-Elect Biden in the hot seat and the S&P 500 soaring, global risk assets followed suit with the Aussie no exception. Opening this morning at 0.7282, the Aussie found further momentum to start the week from across the Pacific as Joe Biden announced his victory to the world on Sunday.

The Pandemic Election kicked off last Tuesday and almost immediately added volatility into foreign exchange markets globally. As the counting began and the results filtered through, the Aussie found support from any signs that Joe Biden would win the election. Nevertheless, the election again made a mockery of the polls with the race becoming too close to call on several occasions and the favourite fluctuating throughout the count. The Aussie followed proceedings in kind with movements to as low as 0.7057 at one point but ultimately found its feet as it become clear that Biden was pulling ahead in key battleground states. As the market drew to a close on Friday and the election still too close to call, the Aussie continued its optimism in a Joe Biden victory and stayed well supported at 0.7263 to record a relatively stable day for what proved to be an erratic week at times.

The week ahead looks to be relatively quiet on the economic calendar with direction to again be dictated by US politics and COVID-19. While the election result reported by major US media firms seems clear and decisive, President Trump has thus far refused to concede. Furthermore, unsubstantiated allegations of fraud and malfeasance by President Trump have added uncertainty into proceedings and in-turn financial markets. Closer to home, the Aussie will look for any signs in an uptick in business confidence after the RBA cut the rate to a record low of 0.1%.

Key Movers

Safe haven currencies found little support during election week with the US Dollar, Swiss Franc and the Japanese Yen all softening as President-Elect Biden pulled ahead of President Trump. Risk assets outperformed as a consequence with equities and commodity currencies doing particularly well. This comes despite President Trump's claims of victory and fraudulent voting casting dispersions on the outcome of the election and adding an element of uncertainty. Furthermore, the market continues to shrug off the threats of a Trump legal challenge as non-credible.

Expected Ranges

AUD/CAD: 0.9409 - 0.9548 ▲

AUD/EUR: 0.6021 - 0.6217 ▲

GBP/AUD: 1.7919 - 1.8281 ▼

AUD/NZD: 1.0624 - 1.0785 ▼

AUD/USD: 0.7146 - 0.7361 ▲