Market Update – 6th November 2018 – Markets Buoyant Ahead Of U.S Mid-Term Elections

Equities in the U.S for the most part advanced with the S&P and Dow up 0.56% and 0.76% respectively, however the tech heavy NASDAQ did continue to remain volatile losing 0.38% by the close. The AUD moved higher with equities and firmer commodity prices while local equities look set to open the day around 0.3% higher.

A big 24 hours ahead for the Aussie dollar and markets more broadly with U.S midterm elections taking place tonight while the counting and tallying of those votes will take place through the day tomorrow. In addition to mid terms we have the RBA cash rate decision and the accompanying rate statement at 2.30pm this afternoon, however no changes to our interest rates are expected meaning all eyes will be on the U.S tonight.

What could happen to markets tomorrow? 

I’ve been trying to think through the possible scenarios for markets tomorrow if the Democrats take control of one or both of the Senate and House of Reps. Bookmakers are thinking that the Republicans will retain control of the Senate, while Democrats will retake control of the House. Should this be the case a large chunk of Trump’s power will be checked by the House of Reps which would suggest his trade war against China may come to a resolution sooner rather than later. This should be good for markets given that a large amount of uncertainty this year has been as a result of Donald Trump’s trade spats and divisive rhetoric aimed mostly towards China. But there is also a fear that if the House is taken by Democrats then the chance of Trump getting his second round of tax cuts (whether they are fair or not) would be unlikely and therefore a negative for U.S equities and growth.

Anyway, its all speculation at this point, lets see where things are at tomorrow. But expect quite a high level of volatility over the next 24 hours. If you have urgent payments and you’re worried about volatility then I’d certainly suggest making payments today ahead of U.S mid terms tonight. Remember what happened during Brexit!

AUD EXCHANGE RATES:

AUD/USD – 0.7181

AUD/GBP – 0.5497

AUD/EUR – 0.6290

AUD/NZD – 1.0781

AUD/JPY – 81.330

USD/BTC – $6,376

OTHER MARKETS: 

All Ords (XAO) – 5,904

Gold – A$1,707/oz

Silver –  A$20.31/oz

WTI – US$62.76/barrel

DATA RELEASES TODAY:

AUD – RBA Rate Statement & Cash Rate Decision at 2.30pm

ALL – U.S Mid-Term Elections tonight and through tomorrow

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick – 0431 278 632 

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