Australian Dollar falls ahead of US election results, Georgia exit polls tilt toward Trump

• The Australian Dollar depreciates as traders adopt caution ahead of the results of the US presidential election.
• The Aussie Dollar could regain momentum as RBA Governor Michele Bullock reaffirmed a hawkish stance on Tuesday.
• Georgia exit polls indicate that Trump holds a 10% lead over Harris, estimated with less than 1% of votes counted.

The Australian Dollar (AUD) retraces its recent gains against the US Dollar (USD) on Wednesday as market anticipation builds ahead of the US presidential election outcome. Traders are also gearing up for the US Federal Reserve's (Fed) policy announcement on Thursday.

The Aussie Dollar strengthened after the Reserve Bank of Australia (RBA) decided to hold the Official Cash Rate (OCR) steady at 4.35% on Tuesday, marking its eighth consecutive pause. RBA Governor Michele Bullock reiterated a hawkish stance, emphasizing the need for restrictive monetary policy given persistent inflation risks and a strong labor market.

Additionally, Australia's latest Purchasing Managers Index (PMI) data indicated a positive shift in private sector activity in October. Growth in the services sector helped offset a continued decline in manufacturing.

Daily Digest Market Movers: Australian Dollar depreciates amid market caution ahead of US election results

• Georgia, one of the early states with available exit polls, shows a tilt toward Republican presidential candidate Donald Trump. With its 16 electoral votes, the initial data suggests Trump has roughly a 10% lead over Democratic candidate Kamala Harris, although this estimate is based on less than 1% of the votes counted, as reported by The Washington Post. This early lead suggests momentum for Trump, but with only a small fraction of votes tallied, the final outcome in Georgia remains uncertain.
• Polling data indicates a close race between Donald Trump and Kamala Harris, with Trump currently holding an edge. On Kalshi, Trump shows a strong 57% to 43% lead over Harris, while on Polymarket, the gap is slightly wider, with Trump at 60.7% and Harris at 39.5%. These figures reflect growing support for Trump as election day approaches, but the race remains competitive.
• Attention will be focused on the Federal Reserve's interest rate decision on Thursday, with markets broadly anticipating a 25 basis point cut. The CME FedWatch Tool currently shows a 96.4% probability that the Fed will lower rates by a quarter percentage point at its November meeting, reflecting strong market consensus for a modest cut this week.
• The US ISM Services Purchasing Managers Index increased to 56.0 in October, up from 54.9 in September, exceeding the forecast of 53.8. In contrast, the S&P Global Services PMI registered at 55.0 in October, slightly below both the prior reading and the expected 55.3.
• Australia's Judo Bank Services PMI improved to 51.0 in October from 50.6 in the previous reading, above the market consensus of 50.6. The Composite PMI climbed to 50.2 in October versus 49.8 prior. Caixin China Services PMI also rose to 52.0 in October from 50.3 in September.
• The TD-MI Inflation Gauge rose by 0.3% month-over-month in October, up from a 0.1% increase in the prior month, marking the highest reading since July and preceding the RBA's November policy meeting. Annually, the gauge climbed by 3.0%, compared to the previous 2.6% reading.
• ANZ Australia Job Advertisements increased by 0.3% month-over-month in October, a notable slowdown from the upwardly revised 2.3% gain in September. Despite the weaker growth, this marks the second consecutive month of increases.
• China's Commerce Minister Wang Wentao met with Australia's Trade Minister Don Farrell on Sunday. China expressed hopes that Australia will continue enhancing its business environment and ensure fair and equitable treatment for Chinese companies.

Technical Analysis: Australian Dollar moves below 0.6600, nine-day EMA

The AUD/USD pair trades near 0.6590 on Wednesday, with technical indicators on the daily chart suggesting a potential continuation of the bearish trend. The pair has slipped below the nine- and 14-day Exponential Moving Averages (EMAs), signaling downward momentum. Additionally, the 14-day Relative Strength Index (RSI) remains below the 50 mark, further supporting a bearish outlook for the pair.

For the AUD/USD pair, immediate support lies near the three-month low at 0.6536. A break below this level could lead the pair toward the critical psychological support at 0.6500.

On the upside, the pair could face resistance at the nine-day EMA at 0.6603, with additional resistance at the 14-day EMA at 0.6620. A breakout above these levels could signal strengthening momentum, potentially targeting the key psychological level of 0.6700.

AUD/USD: Daily Chart