Daily Currency Update

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Without a clear winner, uncertainty prevails

USD - United States Dollar

Demand for the US dollar bounced up and down throughout the night while electoral votes were released. As of this writing, a victor of the 2020 Presidential Election has not been declared.

The US Dollar Index, a composite of currencies weighted against the US dollar, was relatively unchanged and was only down a tenth of one percent since yesterday. Although there were swings up and down, trading was within a tight range against the dollar.

EURUSD was down a tenth of a percent. GBPUSD was down two-thirds of a percent. AUDUSD dropped a fifth of one percent. And USDCAD gained a tenth of one percent.

Key Movers

The US Election took center stage for the currency markets overnight as volatility in the exchange rates picked up some momentum. GBPUSD traded as high as 1.3150 after Florida was declared for President Donald Trump. The dollar then strengthened substantially on the back of the speculation around how this could impact a stimulus package in the US after this election.

Betting houses in the UK now have Trump as the favorite to be the next US president, but if this does materialize, it isn’t going to be a quick process. This could leave the currency markets up in the air and an extended period of volatility for the markets. Previous elections have seen more than 3% swings in EURUSD, GBPUSD and GBPEUR, as well as the stock markets.

Having touched intraday lows at 0.7025 in the aftermath of the Royal Bank of Australia policy announcement, the Australia dollar 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.

Expected Ranges

EUR/USD: 1.161 - 1.176 ▼

GBP/USD: 1.292 - 1.313 ▲

AUD/USD: 0.706 - 0.720 ▼

USD/CAD: 1.309 - 1.329 ▼