EBC Markets Briefing | Aussie dollar propped up by US mid-term election uncertainty

The Australian dollar increased on Wednesday as investors anticipated the outcome of the US midterm elections and positioned for a potential Democratic sweep.

The RBA raised its benchmark cash rate by 25 bps to the highest level since November 2008. The move had been fully priced in, and marked its fifth rate increase this year.

The central bank now predicts that inflation will stay high for most of 2027 and will not return to its 2%–3% goal until late in the year—pushing the timeline back by three quarters.

The country's growth slowed significantly to 2.1% in Q2, but price growth accelerated to 4.3% in September. trade surplus narrowed sharply in August, falling well short of expectations.

A private survey revealed that China's manufacturing sector grew at a slightly reduced rate in October, as the pace of new export orders cooled even while production climbed to a six-month high.

But China's manufacturing resilience is no longer translating into an economic boost for Australia. The housing slump and a pivot to green factory has dampened iron ore and coal imports.

EBC Financial Group analyst says the Aussie dollar has formed a death cross, signaling bearish momentum. The next downside target is the double-bottom support at $0.6916.

Asset Recap

As of market close on 3 November, among EBC major products, Aehr Test Systems shares led gains after reporting a stellar earnings performance in the first quarter of fiscal year 2027, thanks to strong demand from AI.

Food distributor Sysco announced that a cyclosporiasis outbreak further weakened sluggish August restaurant demand, leading to lower-than-expected quarterly sales.

Following the recent correction in tech stocks, UBS Group indicates that valuations for hyperscale data centres have become attractive because market expectations understate the longevity of the AI adoption cycle.

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EBC Financial Group Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Global Financial Collaboration or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.