The Australian Dollar to US Dollar (AUD USD) exchange rate struggled to hold its highs on Thursday afternoon, plunging as risk-sentiment once again slipped, this time in favour of a surging US Dollar.
The US Dollar appeared to regain much of its Wednesday losses against the Australian dollar on Thursday as markets continued to hope that a President Trump would be more pragmatic than the Trump seen on the campaign trail.
"On the AUD we continue to factor (locally) that it will take a further narrowing in spreads to produce a much weaker AUD" notes Deutsche Bank's Chief Strategist Adam Boyton. "The respective Fed and RBA views above should, eventually, produce that. For now, however, our longer-term charts point to AUD/USD around current levels."
Demand for the commodity-correlated Australian Dollar jumped sharply on Thursday, boosted as copper price climbed to their highest level since July 2015.
Given Donald Trump’s pledge to focus on infrastructure spending demand for base metals is predicted to rise, something that is offering fresh support to AUD exchange rates as market anxiety eases.
Wednesday’s risk-off rally is likely to remain for at least a few days as traders try to get a feel for what kind of President Trump will be for global trade.
Markets experienced some major volatility as the results of the US presidential election came through, with Australian Dollar exchange rates plunging in response to the shock victory of Donald Trump.
Risk appetite collapsed dramatically after the Republicans emerged unexpectedly triumphant from the US presidential election, leaving the Australian Dollar to US Dollar (AUD USD) and Australian Dollar to Pound (AUD GBP) exchange rates weaker.
As the polls had pointed towards a victory for Hillary Clinton, markets were wrong-footed when the results began to swing in favour of Donald Trump, leading to sharp selloffs in higher-risk assets.
This prompted the Australian Dollar to US Dollar (AUD/USD) exchange rate to slump, with an atmosphere of fear and uncertainty gripping global markets.
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