AUD/USD: testing 200 dma and prospects for 0.7400 year end

AUD/USD bulls are feeling the brunt of the dollar's rampage across the board, taking the Aussie from 0.7737 recent highs to 0.7524 recent lows on Trump's victory and the U-turn in markets.

Trump in the White House – market implications

"Kit Juckes, economist at Societe Generale, explained that Donald Trump's first day as President-elect saw equities rally, bonds sell-off sharply led by a jump in break-even inflation rates, and the dollar reverse early losses to end up stronger across the board. Where to next?  We are bullish on the dollar against higher-yielding currencies which have benefited from yield-hungry inflows and as long as risk sentiment remains robust." Meanwhile, for the day ahead  we will have a batch of Chinese data for October including retail sales and industrial production.

"Momentum has flipped to negative, targeting 0.7507 (13 Oct low) next," argued analysts at Westpac  

AUD/USD levels

AUD/USD is testing the 200 dma at 0.7539 ahead of the channels low of 0.7420. Analysts at Westpac argued that while further gains to around 0.77 are possible during the month ahead, driven in part by the faltering US dollar and yield-chasing flows, the AUD is losing energy (perhaps a reflection of its declining yield advantage). "By year end, there’s a case for a correction towards 0.74 if the Fed tightens in December as we expect."