Aussie Dollar Points Lower On US Rate Divergence

With the US FOMC raising its Fed Funds target from 1.5% to 1.75% last week, the overnight rate in the USA is higher than the benchmark rate in Australia for the first time in over 25 years.

This removes a key pillar of support for the AUD/USD. 

You're not a member!  Trial today

With the RBA firmly on hold throughout 2018 and the FOMC looking to lift rates at least 2 more times this year, we expect the downside pressure on the Aussie dollar to increase.

The AUD/USD posted a 3-month low of .7670 last week as internal momentum indicators continue to point lower. Current chart patterns suggest a test of the .7150 level over the medium-term.

Investors looking to profit from a lower AUD/USD can buy the BetaShare ETF with the symbol: YANK.

YANK is an inverse ETF, which means the price of YANK increases as the AUD/USD trades lower. It also has a weighting of 2.5%, which means the unit price will fluctuate  by 2.5% for every 1% change in the AUD/USD exchange rate.

With a current price of $13.40, we calculate that the price of YANK will be near $16.50 as the AUD/USD returns to the January 2017 low of .7160.

BetaShare ETF: YANK


Leave a Reply

Investor Signals Pty Ltd ABN 44 143 555 453 is a Corporate Authorised Representative CAR No. 439411 of Advisor Plus Pty Ltd AFSL 474520
© 2024 Investor Signals

Send our ASX Research to your Inbox

Or start a free thirty day trial for our full service, which includes our ASX Research.