AUD/USD: Trump era has both positive and negative implications – Danske Bank

Minna Kuusisto, Analyst at Danske Bank, notes that the depreciation of the USD ahead of the US elections supported the AUD until the Election Day when AUD/USD reached a six-month high of 0.777.

Key Quotes

“In the aftermath of the US elections and broad-based strength in the USD, the AUD reversed to 0.755. The AUD has continued to diverge from oil price developments as US politics have taken centre stage. Trump’s victory is a headwind for most emerging markets but, on the other hand, the promised investments in infrastructure could well support base metals which are crucial to Aussie economy. For now, we still expect monetary policy drivers to dominate. We keep our forecast unchanged and expect the AUD to depreciate gradually as the Fed takes steps in normalising its monetary policy and the RBA, despite its recent shift towards a more neutral tone, stands ready to ease more if needed.”