The Australian dollar may surprise to the upside despite U.S. election uncertainty following a chaotic first presidential debate on Tuesday nL1N2GQ0NQ, particularly if hopes of a U.S. coronavirus relief package are borne out.
Solid PMI data from China helped to support commodities and commodity currencies when equity markets initially tumbled TuesdaynL4N2GR0DD and reports of progress towards reaching a compromise for a fresh U.S. fiscal package gave the AUD/USD upward momentum, as equity markets reversed higher nL1N2GR2ER.
Democratic presidential candidate Joe Biden has firmed as favourite to win the Nov 3 election since the debate and this may provide more incentive for the White House to agree to a deal with House Speaker and Democrat Nancy Pelosi nL1N2GR0TE. If a compromise is reached, risk assets and currencies are likely to move higher, while the USD and JPY would broadly weaken.
AUD/USD resistance lies at the 55-day moving average at 0.7195 and 0.7210, where the 21 DMA converges with the 50% retracement of the 0.7413-0.7006 decline.
A break above 0.7215 targets the 61.2 Fibonacci retracement of the 0.7413-0.7006 move at 0.7257.
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