SYDNEY: The Australian and New Zealand currencies tumbled on Wednesday as the dollar leapt with investors leaning towards a Donald Trump win as early results emerged in the hotly contested US election, although many said the race is too close to call.
Republican Trump won 15 states while Democrat Kamala Harris captured seven states and Washington, D.C., Edison Research projected, but critical battleground states were unlikely to be called for hours or even days.
The Aussie plunged 1.5% to $0.6539, easily breaking through its 200-day moving average of $0.6627.
It was now testing a key support level of $0.6534, which is looking increasingly fragile.
The kiwi dollar slid 1.2% to $0.5938, a three-low month. Support is scant until $0.5850.
As early US election results tricked in, betting websites started to favour Trump over Harris for the nation’s top job, which sent Treasury yields to three-month peaks and the US dollar up 1.6% against its peers.
Analysts generally assume Trump’s plans for restricted immigration, tax cuts and sweeping tariffs if enacted would put more upward pressure on inflation and bond yields, compared with Harris’ centre-left policies.
“We’re still saying it’s too close to call, but it feels like the markets already voted. It’s not the first time it’s voted and it certainly had a couple of head fakes… but it doesn’t seem to be playing out quite as the Democrats had hoped for,” said Tony Sycamore, an analyst at IG.
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“You look at the Aussie dollar, it’s absolutely impulsive in terms of the price action lower.
There is not a lot now in terms of support…. and I can see it falling below $0.65 without too many difficulties.“
Local bonds also took a beating, tracking moves in Treasury prices. Three-year Australian government bond futures fell 9 ticks to 95.84, the lowest since June, while 10-year bonds slid 12 ticks to 95.3, a one-year low.
A day after the Reserve Bank of Australia held interest rates steady and maintained its guidance on not ruling anything in or out on policy, swap traders do not see the first easing to come until July next year.
In New Zealand, data showed the jobless rate rose to a near four-year high of 4.8% in the September quarter as employment dropped by the most since 2022, cementing market wagers of another 50 basis point rate cut this month.
That led swap traders to pare back expectations of a 75 bp move on Nov. 27 to just 9%, down from 30% before the data.
American Dollar Exchange Rate