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  • AUD/USD remains on the front foot after flashing the biggest daily gains in over nine weeks.
  • Bulls ignored RBA’s rate cut, QE as Lowe expects economic progress in short-term.
  • China-Aussie tussle intensifies as Beijing ordered to stop purchasing several items from Canberra.
  • US presidential election becomes the key event, polls favor Democratic victory that suggests more easy money.

AUD/USD takes the bids around 0.7165/70 at the start of Wednesday’s Asian session. In doing so, the quote remains on the front-foot around the seven-day high flashed the previous day over increasing hopes that the Democratic Party’s likely victory in the US election will deliver the much-awaited stimulus.

Upbeat sentiment supersedes dovish RBA…

Despite announcing a 0.15% rate cut and Australian $100 billion of government bond-buying in the next six months, RBA couldn’t impress the AUD/USD sellers. The reason could be lying in the details where Governor Philip Lowe is optimistic about the short-term economic progress.

Also on the negative side were the chatters surrounding China’s push towards stopping the Aussie items’ use by the commodity buyers. The list includes coal, barley, copper ore and concentrate, sugar, timber, wine and lobster.

On the contrary, the anticipated Democratic Party’s victory in the US presidential elections is something that keeps markets hopeful for further fiscal monetary easing. Even so, the latest polls indicate a few states that could deliver a surprise. The voting to elect the American President and representative for both the houses of Congress will be closing from 00:30 AM GMT.

While portraying the market mood, Wall Street marked another profit-making day for the buyers whereas the 10-year Treasury yields rose 4.6 basis points to revisit the early June high with 0.896% of the intraday top.

Moving on, nothing matters more than the early signals of who will dominate the US political system. If the Democrats remain in the spotlight, riskier assets like AUD/USD are likely to stay elevated. However, more volatility is waiting and hence cautious is required.

Read: 2020 Elections: How stocks, gold, dollar could move in four scenarios, nightmare one included

Technical analysis

Despite piercing a two-month-old falling trend line, currently around 0.7150, a 50-day SMA level of 0.7182 challenges the AUD/USD buyers, which in turn favors the sellers looking to the return of the sub-0.7100 area.