Wall St, greenback gain on Republican Senate win
The US dollar jumped to a fresh four-year high in response to the Republican win in the mid-term elections.
It sent the Aussie down sharply to its lowest level since July 2010 of 85.66 US, cents before recovering slightly to 85.95 at 9:00am (AEDT).
Wall Street and oil prices also rose as Republicans are viewed as more business friendly.
The Dow Jones gained 0.6 per cent to 17,485.
The S&P 500 climbed the same amount to 2,024.
During the trading session, Republican Senate leader Mitch McConnell gave an indication of where economic policy is heading, saying he supports deals on international trade and tax reform.
He also sent a message to global oil markets; that he will pursue raising US oil production through the Energy Bill and the approval of the Keystone pipeline.
The benchmark US crude price rose for the first time in five days, taking back some of the losses made yesterday after Saudi Arabia started to sell its oil at bargain prices to the US in a bid to maintain its market share.
West Texas crude picked up from $US76.42 to $US78.66 a barrel.
Energy stocks also rose; Conocco Phillips rose 1.6 per cent and Exxon Mobil rose 0.6 per cent.
Also buoying trade was the ADP National Employment report which showed the US economy added 230,000 jobs in October, setting a record seven straight months of gains over 200,000, according to Reuters.
It comes ahead of the closely watched official non-farm payrolls report which is out Friday.
The ADP jobs data helped the market overlook a slowing of activity in the services sector, which accounts for two-thirds of the US economy.
The Institute for Supply Management said its services index fell to 57.1 last month from a reading of 58.6 in September.
Across the Atlantic, markets took back most of yesterday's losses.
London's FTSE 100 added 1.3 per cent to 6,539, and markets on the continent added between 1 and 2 per cent.
The gains come on speculation that the European Central Bank will bow to intensifying pressure to counter low inflation and flagging economic growth by expanding stimulus.
The Australian share market was set to follow global markets higher; at 8:25am (AEDT) the ASX SPI 200 was 0.3 per cent higher at 5,518.
Commodities, except oil, came under selling pressure last night, spot gold dropped sharply to $US1,142.65 an ounce and the sport iron ore price dropped to $US76.00 which was also weighing on the local currency.
