Global equities rise, USD falls ahead of the US election
The Australian dollar erased earlier losses as traders digested the relatively dovish interest rate decision by the RBA. In its November meeting, the bank decided to slash interest rates by 0.15% to 0.10%. The members also decided to cut the target yield of the three-year government bonds to 0.1%. They also cut the interest rate of the term lending facility and announced a plan to buy government bonds worth A$100 billion in the next six months. Additionally, the members pledged not to hike interest rates in the next three years.
Global stocks rose while the US dollar declined as traders waited for the outcome of the US election. In Europe, the DAX index rose by more than 1.80% while in the UK and France, the FTSE 100 and CAC 40 also rose by more than 1.4%. Elsewhere, in the United States, futures linked to the Dow Jones and S&P 500 are up by more than 1%. At the same time, the US dollar index dropped by more than 0.60%. In general, the market seems to be brushing-off the risks associated with the election now that more Americans have voted via mail. Also, they are hopeful that the election will bring more clarity about US policy.
The DAX index rose by more than 1.80% as traders reacted to a new government program to provide more stimulus to automakers. According to the economy minister, the government could pump-in more than €4 billion to the companies to help them improve their products. Specifically, the funds will be used in the development of electric and autonomous cars. The main laggard in the index was Bayer, whose shares dropped by more than 1% after the company reported weak results. Its total revenue dropped by more than 6% mostly due to the weakness of its crop sciences business.
The AUD/USD pair rose to an intraday high of 0.7130. On the four-hour chart, the price has managed to move above the 25-day and 15-day moving averages. That is a sign that bulls are taking control. At the same time, the moving average of oscillator and the mainline of the MACD have moved above the neutral level. Also, this price is slightly below the important resistance level at 0.7160. Therefore, the pair is likely to continue rising as bulls aim for 0.7160.
The EUR/USD pair rose to an intraday high of 1.1717 ahead of the US election. On the hourly chart, the pair managed to move above the initial resistance at 1.1700 and is now at the highest it has been since Thursday last week. The price is along the upper line of the Bollinger bands while the awesome oscillator is above the neutral level. It is also slightly below the 38.2% retracement level. Therefore, the pair could continue pushing higher as bulls aim for the 50% retracement at 1.1750.
The DAX index gapped to an intraday high of €12,000. That is significantly higher than yesterday’s low of €11,323. The price is above the short and medium-term simple moving averages. At the same time, the momentum indicator has moved to the highest level in several months on the four-hour chart. While the index is likely to end the day at the current range, there is a possibility of more volatility as US election results stream-in.