Search ForexCrunch
  • AUD/JPY stays well bid as risk catalysts remain elevated.
  • Early polls suggest Trump smaller victories in Indiana, giving hopes of a bigger win by the Democrats.
  • S&P 500 Futures add over 1.0%, rises for the consecutive third day.
  • Aussie Retail Sales, China’s Caixin Services PMI can offer intermediate moves, major attention is on the US elections.

AUD/JPY takes the bids near 75.36 as market optimism concerning the US elections propels risk barometers during Wednesday’s Asian session. The pair registered the biggest gains in five months the previous day despite RBA’s dovish move.

Trump’s little gains back blue wave hopes…

With the early polls from the 2020 US presidential elections offering only a meager lead to President Donald Trump in Indiana, while also favoring opponent Joe Biden’s victory in Kentucky, the market remains optimistic of the Democratic victory. Earlier in the day, YouGov predicted a 382 seat victory for Biden, which in turn offered further easy path for the Democrats ruling in both the US houses, a condition famous as the blue wave.

Read: 2020 US Elections: YouGov predicts Biden winning 382 votes

On Tuesday, the RBA announced a 0.15% rate cut and a quantitative easing (QE) of Australian dollar 100 billion while turning down odds of a rate hike in at least three years from now. However, Governor Philip Lowe conveyed optimism for short-term economic recovery and defied the market impact of the much-anticipated event.

Also favoring the pair’s upside was a strong belief that the Democratic Party will regain control in the US and will offer the needed stimulus to the world’s largest economy. As a result, Wall Street flashed the second positive day whereas the US 10-year Treasury yields rose to the highest since early June.

Moving on, global markets remain vulnerable to further volatility amid polls concerning the US 2020 elections. However, any surprise victory by the ruling Republican may spoil the mood and weigh on the quote.

Read: 2020 Elections: The case for a historic Trump defeat, in five quick charts

From the economic calendar, the second reading of Australia’s September month Retail Sales can confirm the -1.5% initial forecast. Further, China’s Caixin Services PMI could also rise more than 54.8 prior and favor the bulls.

Technical analysis

100-day SMA and a descending trend line from August 31, currently around 75.42/48, challenges the AUD/JPY bulls targeting the previous month’s high of 76.51.