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Nov 04 - 01:55 AM

AUD/USD - COMMENT-AUD/USD To Remain Volatile On U.S. Election Drama

By John Noonan  —  Nov 04 - 12:25 AM

The AUD/USD has traded in a 2.40% range Wednesday as the market was forced to re-price various scenarios for the outcome of the U.S. presidential election. Expect the volatility to continue and possibly accelerate in the coming days if there is no clear winner.

The market was pricing in a 'Blue Wave' result with Democratic challenger Joe Biden winning the election with a clear majority and the Democrats gaining enough Senate seats on the coat-tails of the Biden win to control the Senate.
That scenario was undermined by early voting results showing President Trump doing better in some of the southern battleground states than anticipated.

S&P E-mini futures went from being up over 1.0% to down nearly 1.0%, before bookmakers changed their odds to show Trump as a prohibitive favourite to win nL4N2HQ11C.
E-minis reversed to be up almost 2.0% on hopes of a clear-cut and uncontested Trump victory.

The AUD/USD bounced back to 0.7125 on the rebound in E-mini futures, but there is still plenty of uncertainty.
Despite the relatively strong showing by Trump, the election remains too close to call nL1N2HP0DS.

If Trump doesn't get the 270 electoral votes to win the election on Wednesday, it will come down to the counting of postal votes in key states such as Pennsylvania and Michigan, which could take days.

If Biden somehow wins by a narrow margin, there is a strong chance Trump will contest the election and this would send risk assets and the AUD/USD into a free-fall.
Standing aside is the preferred strategy for now.

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Source:
Refinitiv IFR Research/Market Commentary

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