The highlight of the week was the us Presidential election on Tuesday 8 Nov.As markets were expecting an easy victory of Clinton and had priced it in, we went through a Topsy- turfy day when it became clear that Trump would win.
At first funds were pushed all over without clear direction.But as results came in, and as it s the case when market go through uncertainty, funds were move into safe havens GOLD and Japanese YEN that rallied.Commodity dollars(including AUD) ,US stock , USD, and the benchmark US T-note treasury yield , AUSTRALIA 10-year bond lost ground.
The Dust did not take long to settle, as early as Thursday 10 Nov it seemed that investors quickly came to term with a TRUMP presidency.
Australia 10 year bond started going up but it was out weighted by the gain in the US treasury yield and the strength of Dixy. Gold and JPY gradually lost some of the early gains.
IMPACT OF TRUMP VICTORY ON AUD AND WHY I M BEARISH ON AUD. www.news.com.au
TRUMP’s protectionist campaign rhetoric and promises if kept would lead to Global trade instability.In fact he promised to revise trade terms with China by increasing custom tariffs and to withdraw from agreements like TPP( trans Pacific Partnership).
Australia would adversely be affected firstly, because it ‘s an open Economy with a high trade exposure(export =21% of GDP)and also because Australia is a proxy of China.
Other fundamentalsthat negatively affected AUD
China: Export -7.3% < -6%
Import -1.4% < -1%
Trade balance 49.06B0.8–> positive news
NEXT WEEK ECONOMIC CALENDAR
china: Industrial Production and Retail sales
RBA governor Lowe speaks
AUSTRALIA:Wages price index (QoQ and YoY)
Full Employment Change(Oct)
Unemployment Rate (Oct)
TECHNICAL SUMMARY . Please refer to charts below.