While Americans hit the voting booths days ago, there is still no clear result in the US Presidential Election.
Commonwealth Bank’s Head of International Economics, Joseph Capurso, said the general market consensus at the moment is leaning towards a narrow victory by former Vice President Joe Biden.
In addition, it is looking like the most likely scenario would see the Democrats keep their majority in the House of Representatives and the Republicans keep their majority in the Senate.
According to Mr Capurso, should this scenario come to fruition, it would likely cause the Australian dollar (AUD) to ‘lift modestly’.
“We expect the AUD to lift modestly – 2 per cent to 3 per cent over one to two months – above our existing baseline of a stronger Australian dollar,” he said.
“The strength in the AUD reflects the weaker outlook for the US economy because uncertainty about Congress agreeing to need further fiscal stimulus. But any reaction by the AUD/USD is likely to be short-lived because we judge a Biden victory is largely priced into the USD.”