Australian dollar (AUD) surges following RBA decision
The Australian dollar (AUD) strengthened yesterday, with a hawkish hold from the Reserve Bank of Australia (RBA) initially boosting the ‘Aussie’.
AUD then extended its upside into the evening, striking multi-week highs against some peers, amid a risk-on market mood.
Today, the US election will be the main driver of the ‘Aussie’. We are likely to see increased volatility as the results of the US presidential election begin to trickle in. A win for Harris is likely to boost the AUD, and a win for Trump is likely to put downward pressure on the AUD.
New Zealand dollar (NZD) firms as risk appetite improves
The New Zealand dollar (NZD) also gained ground yesterday, thanks to the upbeat mood and NZD’s positive correlation with AUD, although its upside was limited.
Similar to the ‘Aussie’, market sentiment and volatility stemming from the US election could drive movement in the ‘kiwi’ today.
Pound (GBP) uncertain as BoE decision looms
The pound (GBP) was mixed yesterday as markets largely ignored an upward revision to the UK’s final services PMI.
With the Bank of England (BoE) interest rate decision looming, GBP investors were reluctant to place aggressive bets on the pound.
Sterling may remain somewhat subdued today, with the BoE announcing its penultimate policy decision of 2024 tomorrow.
Euro (EUR) mixed amid lack of data
The euro (EUR) traded without a clear direction yesterday amid a lack of market-moving Eurozone data.
In addition, a risk-on mood pressured the safer single currency while EUR’s negative correlation with the US dollar (USD) lent it support.
Later this evening, a forecast recovery in German factory orders could support the euro. However, USD volatility may cause turbulence for EUR exchange rates.
US dollar (USD) slides amid election uncertainty
The US dollar unravelled yesterday as uncertainty and a risk-on mood amid the US presidential election dampened USD’s appeal.
A stronger-than-forecast US services PMI in the afternoon failed to lift the ‘greenback’, with the PMI also revealing that price pressures are easing, thereby fuelling Federal Reserve interest rate cut bets.
Turning to today, USD investors will likely be poring over the election results as they are announced. Expect to see volatility, with the US dollar potentially strengthening if it looks like former president Donald Trump could win a second term.
Canadian dollar (CAD) dented by USD correlation
The Canadian dollar (CAD) slipped against its stronger rivals yesterday as CAD’s correlation with USD weighed on the ‘loonie’. However, rising oil prices lent the crude-linked currency some support.
USD and oil price movements could drive the Canadian dollar again today, with CAD potentially volatile amid the US election results.
Data releases
07:45 NZD Unemployment Rate (Q3)
08:00 AUD Ai Group Industry Index (Oct)
17:00 EUR German Factory Orders (Sep)
20:00 EUR PPI (Sep)