TLDR: Democrats have swept Congress, and by a bigger margin than the bare minimum they needed. The US Dollar wobbled, Wall Street rallied once the dust settled, and the Aussie Dollar is back above 70 US cents (mid-market rate). A few races are still being counted, so expect small changes to the final numbers.

We said the midterms probably wouldn't rock your travel money too much, and so far, the market agrees. Here's what happened, how the AUD reacted, and what to keep an eye on next. (Missed our pre-election explainer? Catch up here). 

The low down:

• The result: A blue wave swept the States with the Democrats winning both the House and the Senate.
• The House: NBC projects about 258 Democratic seats, the party's widest margin since 1993.
• The Senate: Democrats flipped enough Republican-held seats to erase the Republicans 53-47 advantage.
• Wall Street: stocks rallied after the result, with the Dow up about 3%.
• The Aussie Dollar: fell flat on Wednesday, then went back above 70 US cents on Thursday morning.
• Interest rates: the RBA lifted the cash rate to 4.85%, an 18-year high, earlier this week.

What happened in the US midterm elections?

Democrats didn’t just win, they won BIG. NBC projects they’ll end up with about 258 seats in the House, and they only needed 218 to take control. In the Senate, Democrats took at least four seats off the Republicans, including some in States that usually vote Republican, which was enough to reach the 51 seats they needed to take over, according to the Associated Press. NBC counts seven seats changing hands, including Texas, Ohio, Iowa and Maine. 

The counting isn’t quite finished, though. When we last checked, the Associated Press hadn’t yet declared a winner in Alaska and Mississippi, the last two Senate races still up in the air. The final House numbers could also shift by a few seats either way. 

How did the Aussie Dollar react to the midterm results?

It happened in two stages. First, the US Dollar took a hit. As early results rolled in, investors got nervous, sold shares and US Dollars, and parked their money in safer US government bonds. That sent the USD down sharply against most major currencies. The Aussie Dollar didn’t do much, sitting at around 69.6 to 69.8 US cents on Wednesday.

Then Wall Street found its confidence again. Once the result was clear and the uncertainty was gone, USD shares bounced back, with the Dow jumping about 3%. A weaker US Dollar and falling bond yields (i.e. the returns on government bonds) also made investors feel braver. The Aussie Dollar followed, and by Thursday morning it was back above 70 US cents.

Here's how that stacks up against what we said in our pre-election blog: 

Why did the AUD take a day to catch up?

The Aussie Dollar tends to do well when investors feel confident, and struggle when they’re nervous. On Wednesday, US share markets were heading down, and investors were worried that a Democratic Congress might bring tougher rules for AI companies, which hit US tech shares. Analysts reckon that nervousness was holding the AUD back, even though the US Dollar was weaker. Once Wall Street bounced back, the Aussie Dollar did too. 

What happens next for AUD to USD?

The experts don’t all see eye to eye, but here’s what they’re saying:

• The US Dollar could fall further: The CBA says a Democratic Congress is likely to rein in government spending, which could push the USD lower.
• Don’t expect a big shake-up: ING doesn’t think the election alone will change where the US Dollar is heading, because it mostly moves with US interest rates.
• Keep an eye on political stand-offs: Democrats now run Congress, but President Trump can still block laws with his veto. ING says arguments over government funding and the limit on how much the US can borrow (i.e. the 'debt ceiling') could make the exchange rate bumpy.
• Interest rates and investor confidence come next: Markets still expect US interest rates to rise a bit further, but they’re rethinking how fast. 

The bottom line: the midterm election is over, but US interest rates and how confident investors feel will probably move your exchange rate more than the next political fight in Washington.

What should Aussie travellers do now?

Don’t panic, and don’t try to pick the perfect moment to buy. The Aussie Dollar is sitting at about 70 US cents right now (that’s the mid-market rate, which is different from the rate you’ll get in store).

If you’re heading to the United States anytime soon:

• Join the Travel Money Club to get rate alerts. We’ll watch the USD exchange rate so you don’t have to, and give you a nudge when the rate is looking good for you.
• Add Rate Move Protection to your in-store purchase. If the exchange rate moves in your favour within 7 days, we’ll refund you the difference.*
• Coming home with leftover USD? You can sell it back to us at any of Travel Money Oz’s 90+ stores. You might even qualify for our Buy Back Bonus!