Market Update – 2nd November 2018 – AUD Surges Past 0.7200 On Strong Demand For Exports And Buoyant Equities

A bumper local trade balance figure yesterday and positive risk sentiment overnight has seen the AUD surge past 0.7200 vs. the Greenback to it’s highest point in just over a month. The strong move was also a technical breakout with AUD/USD exiting a bearish channel which began in late January. See chart below:

The much stronger than anticipated trade balance figure was likely a result of a number of factors which include a lower AUD, strong commodities prices and demand for those commodities, but also Chinese trade tariffs on U.S goods which have helped spur demand for our home grown products with almond exporters big winners.

It’s too early to tell if the trend has well and truly turned for AUD/USD however something I have been mulling over is the impact that the U.S midterm elections might have on the USD. Recent polling and history suggests the Democratic party will retake control of the U.S Congress which will dramatically check the power Trump wields as President. Trump’s policies have been very supportive of the USD and that support could wane if a Democrat controlled congress curtails some of Trump’s unconventional and anti-globalist policies, hence higher AUD/USD.

More local economic data out today with retail sales, while in the U.S non-farm employment is due for release at 11.30pm. Goes without saying it could be another very volatile 24 hours for the AUD.

AUD EXCHANGE RATES:

AUD/USD – 0.7201

AUD/GBP – 0.5503

AUD/EUR – 0.6287

AUD/NZD – 1.0803

AUD/JPY – 80.810

USD/BTC – $6,307

OTHER MARKETS: 

All Ords (XAO) – 5,925

Gold – A$1,711/oz

Silver –  A$20.44/oz

WTI – US$63.53/barrel

DATA RELEASES TODAY:

AUD – Retail Sales m/m at 11.30am

USD – Non-Farm Employment Change at 11.30pm