Credit Suisse discusses AUD outlook around the US November elections.
"Barring a spectacular surprise decision from the RBA on 3 November (e.g. no easing at all, or at the other extreme, target cash rate cut to 0%), we suspect that price action in AUDUSD will be more closely driven by the outcome of the US election around that date and in the following weeks. Over the past month, market expectations have been resiliently set on a “blue sweep” outcome and on ensuing USD weakness. AUD has not participated in the price action, and is therefore likely to be viewed as a “catch up” play in the event of an election outcome in line with market expectations. In the event of a less USD-negative / risk-positive outcome from US elections, we think it is reasonable instead to expect the procyclical aspect of AUD to push the pair sub 0.70,' CS notes.
"This overall leaves us inclined to not change our pre-election AUDUSD target from the current 0.70 level, despite spot FX being at the time of writing fairly close to the target," CS adds.