Home Daily Commentaries AUD outperforms as RBA leaves rates on hold and attentions turn to US election

AUD outperforms as RBA leaves rates on hold and attentions turn to US election

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Wednesday 6 November, 2024

Daily Currency Update

The Australian dollar outperformed through trade on Monday jumping back through US$0.66 amid a positive risk backdrop and a hawkish RBA. While the RBA left rates on hold yesterday it refused to be drawn on when it will commence its easing cycle, instead espousing the need to continue the fight against inflation. With the trimmed mean inflation rate still comfortably above the RBA’s 2-3% target band it is unlikely policy makers will issue a rate cut before May next year. It is clear the board is not yet comfortable that rates are tracking back toward the target as a risk to the upside remains in play. Having broken back above US$0.66 the AUD pushed toward intraday highs just short of US$0.6650 at US$0.6642 before settling and opening this morning at US$0.6630/40.

Our attention now turns to the US election. The first polls will close around 10 AM AEDT and an election result will be unlikely before the close of business. With the hotly contested race, we expect whippy trades as votes are counted. A Trump win would add downward pressure on the AUD while a Harris victory could help the AUD extend back toward US$0.67/0.68.

Key Movers

The US dollar retreated against a positive risk backdrop as Americans hit polling stations on Tuesday. The DXY dollar index gave up nearly half a percent and was lower against all 10 major currencies. The euro and the GBP advanced 0.5% while the yen enjoyed modest gains too, up 0.4% for the day. US ISM data supported a narrative of US economic strength, helping lift US treasury yields and dispel fears of recession. With equities and risk assets rallying our attention now turns to the US election. The first polls will close around 10 AM AEDT and an election result will be unlikely before the close of business. Polls leading into the election suggest an extremely close race with the outcome hinging on just a handful of critical battleground states. We expect price action to remain whippy throughout the count as markets respond and adjust expectations as votes pour in.

Expected Ranges

  • AUD/USD: 0.6500 - 0.6700 ▲
  • AUD/EUR: 0.6020 - 0.6120 ▲
  • GBP/AUD: 1.9500 - 1.9700 ▼
  • AUD/NZD: 1.1020 - 1.1120 ▲
  • AUD/CAD: 0.9150 - 0.9220 ▲

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.

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