APAC Morning Update: US Election Day - 4 Nov 2020

It’s risk on going into the U.S election day, as the AUD/USD jumped back towards 0.7150 and the NZD/USD leapt back towards 0.6700.

With Americans headed to the polls, investors increased their bets that Democrat Joe Biden will win the U.S presidential election and launch a new stimulus package.

Biden is leading in the national polls but Donald Trump is close enough in the swing states to make today look like a Hollywood movie ending, so watch this space.

The RBA cut interest rates as expected yesterday, and launched another round of quantitative easing, with the central bank extending bond purchases out five to ten years for $100 million. The RBA also slightly upgraded its outlook on economic growth, citing Australia’s progress in containing COVID. There was still a dovish tinge to the statement with the board prepared to do more if required.

We also saw the first ever Melbourne cup without spectators, and it just wasn’t quite the same without the people watching experience to compliment the fantastic racing event.

Britain and the UK

In Europe, there is no shock that the European union and Britain have so far failed to reach an agreement on the three most persistent sticking points, with both sides struggling to make any breakthrough in securing a trade deal, which looks a long way off. Businesses are hoping that time pressure and the COVID crisis spiralling across Europe and the UK will push a deal through.

Stock markets

Wall street main indexes jumped overnight once again with the hope of a clear winner in the election and more stimulus. The correlation between the S&P and the AUD and NZD cannot be ignored. Stimulus has driven equity markets higher, and fuelled risk currencies to the levels we see today. Stimulus equals a higher currency!

What to expect

Expect volatility to continue this week, and large overnight moves look set to continue. Whether you are an importer, or exporter, the overnight moves in the European and U.S sessions have been huge, and market orders have been working well if you are looking to target better levels.

Global equity markets are all higher - Dow +2.1%, S&P 500 +1.9%, FTSE +2.3%, DAX +2.6%, CAC +2.4%, Nikkei +1.4%, Shanghai +1.4%.

Gold prices are up 0.8% to USD$1,908 an ounce and WTI Crude Oil prices are also up 2.44% to US $37.70 per barrel.