The Aussie Dollar fell hard last night breaking the key support area of .7600 versus the US Dollar and closing the NY session down almost 1.5% for the day.
After consolidating for several weeks above .7650, the AUD/USD finally broke down. Although recent economic reports have been fairly good, yesterday’s weaker trade balance figures were a sharp reminder of the damage a stronger currency can do to an export dependent economy.
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Analysts were looking for the January trade surplus to increase to 3.8 billion, but instead it shrank to 1.3 billion; less than a third of the expected level. The main draw on the trade balance were exports, which fell over 3% for the month.
The RBA has been clear that a stronger AUD will act as an economic headwind as Australia moves away from a mining-based economy.
Over the last 18 months, the AUD/USD has traded in a broad range between .7000 and .7750. Technically, last week’s high of .7740 could stand as a medium-term top as US Dollar strength pushes the AUD toward the bottom end of the range.
Investors looking to benefit from a move lower in the AUD/USD can consider the BetaShares AUD-based Exchange Traded Funds.
BetaShares offers two ASX-listed ETFs which increase in value as the AUD trades lower against the USD.
These two ETFs are called: USD, which is unweighted, and YANK, which has an approximate weighting of 2.5 to 1.
Contact us for more information about these AUD-based ETFs.
