Votes Being Counted in US Mid Term Elections

AUD

Aussie dollar had a mixed performance overnight, with markets sitting tight for the US congressional election results to start flowing through shortly. Asian equities were mixed on Tuesday with the Nikkei climbing 1.25% and Hang Seng -0.7%. The ASX closed 0.4% higher driven by gains in utilities and consumer stocks. Commodities had a mixed performance as well, Gold being down -0.2%, Silver -0.7% and Iron Ore +0.7%. Gov Lowe spoke on inflation last night and how the RBA plans to combat it. He reiterated the stress it's having on households, businesses and individual savings, planning to bring it down to the RBA's target rate of 2-3%. We have inflation data released in China today where we expect CPI may have already peaked in September and will likely edge down a bit in October. PPI inflation could turn negative, considering a high comparison base last year. The Chinese economy is actually in fear of deflation, a stark contrast to the western world's inflation worries. 

USD

AUDUSD is up last night finally creating new 2-month highs of 0.6551 before open lower at 0.6503 right now. US equities had a good performance on close last night, Dow Jones +0.9%, S&P 500 +0.3% and NASDAQ +0.2%. There were several FOMC member talks last night but a lack of strong fundamental data to move markets with another potentially quieter day ahead as investors await the final results of US mid-term elections and ahead of tomorrow’s key US inflation report. The polling, currently suggesting a “split government” or a “lame duck President”; where the Executive is controlled by one party and Congress by the other. Depending on the outcome between the two will have a very different effect in terms of market outcome with USD strength expected in the event of a Democratic win and vice versa.

EUR

AUDEUR is opening lower from where it took off yesterday morning sitting at 0.6443. European equities performing quite well on close with Eurostoxx 50 +0.78% in the green. Last night we had Retail Sales for September which printed in at 0.5% from a 0.2% expected with a year-on-year result of -0.6% beating estimates of -1.1%. There was little reaction however to the data itself. The ECB’s Guindos said the ECB will continue raising rates to a level that ensures inflation will come back into line with their definition of price stability. That level will depend on the data they receive, the evolution of inflation, economic conditions, demand and energy prices. Today we have no data coming out of Europe.

GBP

AUDGBP is slightly up from where we took off last night sitting at 0.5633. UK equities making little to no ground with FTSE 100 up 0.1%. The BOE’s Pill spoke last night saying energy price increases are squeezing household income and that gas price increases are a big shock for the UK economy. Pill said the BOE is seeking to understand the impact of mortgage rate rises and at some point must think about what rate is appropriate while there is still more to do now on raising UK rates. No meaningful data from the UK due today in the lead up to Friday's important GDP data.

NZD

AUDNZD is trading on par from yesterday sitting at 1.0903. Quiet week from the Kiwi’s with little to no data. Yesterday we had Inflation Expectation data sitting at 3.62%, quite substantially above previous levels of 3.07% which will frustrate the RBNZ and probably keep the NZD in the box seat when compared against AUD. We have no further data coming out until Friday.