Will AUD/USD rally if the unwinding of ‘Trump trade’ gathers pace?
|US President Trump withdrew his health care bill after it failed to gain enough support to pass in Congress. This is seen as a huge blow to President Trump.
Moreover, the vote was seen as a litmus test of President Trump’s legislative ability. Hence, experts fear the failure to get the health care bill passed could force markets to question the Trump’s ability to deliver on other campaign promises - massive tax cuts and infrastructure spending.
The resulting unwinding of the Trump trade could see US dollar take a beating across the board. As of now, The Dollar Index is down 0.41% at 99.20 levels, while the AUD/USD is trading dead flat around 0.7630.
Aussie to focus on commodities
There is a risk that Aussie may underperform or may even drop against the US dollar as even the commodity prices are likely to feel the heat of the unwinding of the Trump trade.
Comex copper is down almost 1% and that could be the reason for the flat action in the Aussie dollar this Monday morning. With little first tier data due for release today, the focus remains on the commodity prices.
AUD/USD Technical Levels
A break below 0.76 (zero figure) would expose 0.7570 (support offered by the trend line drawn from Dec 29 low and Mar 9 low). A violation there could yield further sell-off to 0.7491 (Mar 9 low). On the higher side, breach of resistance at 0.7639 (Mar 22 low) would expose 0.7663 (Mar 17 low) and 0.77 (zero figure).
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