AUD Rebounds Above 0.70 as Oil Plummets 8% Following US Election Sweep

AUD

The Australian Dollar opens firmer against the greenback at 0.7004, pushing back above the key 0.7000 threshold as global risk sentiment experienced a sharp overnight rally. The primary catalyst was a decisive turn in US political and geopolitical developments, which triggered an 8% collapse in Brent crude prices to $94.60/bbl—its lowest level in two months. Locally, the ASX 200 dipped 0.6% yesterday, dragged down by materials (-1.5%) and industrials (-1.2%), while Asian equities ended mixed (Shenzhen +2.3%, Hang Seng +1.7%, Nikkei -1.4%). Domestically, September nominal household spending rose 0.6% m/m (real spending up 0.7% q/q in Q3), confirming resilient consumer activity following Tuesday's RBA rate hike to 4.85%. Looking ahead, the domestic economic calendar is quiet for Australia in the near term as markets digest recent central bank action.
 

USD

The AUD/USD pair recovered its recent losses to trade back above 0.7006 as the US Dollar weakened following a Democratic sweep of both the House and Senate in the US Midterm elections. Markets expect the shift in congressional control to create legislative gridlock, while President Trump's confirmation that he has "no immediate plans" to strike Iran significantly reduced the geopolitical risk premium in energy markets. Wall Street staged a powerful rally on the news, led by the Dow Jones (+3.0%), Nasdaq (+2.0%), and S&P 500 (+1.9%). On the economic data front, US Treasury yields fell (2-year down 7bps, 10-year down 8bps), while October ISM Services ticked down slightly to 54.5 (from 54.9). Looking ahead, traders are focusing on tonight's initial US weekly unemployment claims as markets digest the election fallout, ahead of Friday's official Non-Farm Payrolls and Unemployment Rate release (expected to print around 4.2%).

EUR

The AUD/EUR cross edges slightly lower to open at 0.6238, as European assets posted strong gains alongside the broader global risk rally. European share markets closed sharply higher, with the DAX jumping +2.2% and the CAC gaining +2.0%, bolstered by lower input costs from falling crude prices. In economic data, Eurozone October CPI printed in line with expectations at 0.4% m/m and 4.0% y/y headline (up from 3.8% in September), while core inflation held steady at 2.5% y/y. The Euro remains supported as persistent inflation data keeps ECB rate expectations anchored.
 

GBP

The AUD/GBP pair opens flat at 0.5201 as markets position for a major UK economic data dump tonight. The UK’s FTSE 100 joined the global equity rally overnight, finishing +1.8% higher. Sterling remains well-supported ahead of tonight's Bank of England Monetary Policy Summary and Official Bank Rate announcement, where a 25 basis point rate hike to 4.00% is widely expected. Markets will be watching closely as BoE Governor Andrew Bailey speaks shortly after the decision; any unexpected commentary or voting split is likely to inject significant volatility into GBP crosses.

NZD

The AUDNZD opens flat at 1.2450, trading between 1.2436 and 1.2522 over the past 24 hours after NZ unemployment rose to 5.7% (exp. 5.5%) and employment fell 0.1% (exp. +0.4%) yesterday. No more major economic news out of New Zealand until Saturday’s Parliamentary Elections.