- US citizens will be voting throughout the day. Global markets fix their attention on the US election results.
- The Dow Jones declines to its lowest price since September 19th. NVIDIA is set to replace Intel on November 8th.
- The US Dollar corrects back upwards after opening on Monday with a bearish price gap measuring 0.35%.
- The Australian Dollar increases in value as the Reserve Bank of Australia keeps interest rates unchanged.
AUDUSD – RBA Advises Inflation Too High!
The price of the AUDUSD exchange has risen largely due to the US elections and the Reserve Bank of Australia’s decision to keep interest rates at 4.35%. The price of the US Dollar across the market fell on Monday and started the day 0.75% lower. The AUDUSD is again increasing in value and approaching yesterday’s resistance level at 0.66182.
Currently, the best performing currency is the Australian Dollar while the worst performing are the US Dollar and Japanese Yen. However, investors should note that this tends to rapidly change as the Asian session ends. This is something investors will continue to monitor as the European session opens. According to analysts, if Donald Trump wins the elections, the price of the US Dollar is likely to rise. According to analysts, the Federal Reserve is also likely to become less dovish and more cautious on interest rate adjustments. Currently, the Chicago Exchange’s Fed Tool indicates the market expects a 0.25% cut this week with a further 0.25% adjustment in December.
The RBA kept its key interest rate unchanged for the eighth consecutive meeting, as it waits for more signs that inflation will soon return to its inflation target. During the press conference, Governor Mrs Bullock declined to provide any guidance on the likelihood of rate cuts or hikes in the coming year, but noted that underlying inflation in the September quarter remained “still too high. We’ve made good progress. But as we’ve seen throughout the year, the final stage of bringing inflation down is neither easy nor straightforward,” she said.
In terms of technical analysis, the price of the AUDUSD is trading above the trend line, moving averages and the neutral level on the RSI. However, investors should note that the price action can change as the Asian session ends. In addition to this, the outcome of the US elections will also significantly influence the US Dollar. According to analysts, a Trump Presidency is likely to support the US Dollar but it cannot be certain this will be the first reaction.
Dow Jones – NVIDIA To Replace Intel!
The Dow Jones ended the day lower after the index came under significant selling pressure as the US session opened. The index is now trading 3.50% lower than its recent all-time high on October 21st. Monday’s decline was largely due to the price of UnitedHealth Group and Goldman Sachs stocks declining in value. However, most of the Dow Jones (73%) also declined.
As no major earnings reports are due to be made public for any of the 30 Dow Jones components, investors are primarily watching the US elections results and any forward guidance given by the Federal Reserve. The next major quarterly earnings report for the Dow Jones will come from Home Depot on November 12th. Home Depot has beaten their earnings expectations on the past 3 occasions. However, the stock has fallen 3.06% lower over the past month indicating demand is not increasing as the earnings report nears. Though this is something traders will continue to monitor as the 12th edges closer.
The price action continues to follow a traditional bearish trend price pattern. However, the price quickly rose yesterday after declining to a new low. In addition to this, the RSI also forms a divergence pattern, indicating selling pressure may be decreasing. The price of the Dow Jones has fallen in value for 3 consecutive weeks which in 2024 so far has resulted in buyers re-entering the market. This also comes in line with the divergence signal, however, this cannot be certain particularly as the US elections are taking place today. If the price increases above the $41,925.53 level, traders potentially may see this as enough momentum to indicate a correction back to $42,093.00.
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Michalis Efthymiou
Market Analyst
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