Originally published by AxiTrader
Quick Recap
The Australian dollar is this morning trading at 0.7763. That's up and through the top of the recent range and a clear vote by traders that Hillary Clinton is going to win the US presidential election. Indeed the S&P 500 has recouped most of its 9-day loss which tells you much of the expected good news is priced into markets.
The questions for Aussie dollar traders is whether that is also true for the AUD/USD exchange rate at these levels or whether it is ready to challenge the 2016 high of 0.7734.
What You Need To Know
I've been consistently discussing the positive drivers of Australian dollar strength for some time now. Yesterday I highlighted how the key drivers I use in my Aussie dollar thinking have contributed to my bullish outlook and noted that it has largely been the fall in risk appetite - which accompanied fear of a Trump presidency - was the key handbrake holding the Aussie dollar back.
So as dangerous as it is that investors are betting now that a Hillary Clinton presidency is a lock the impact on the Aussie dollar has been to release the handbrake and drive the price up and through the range high and the supply zone we've been watching for some time.
Of course all bets are off, just like risk appetite will be, if Trump triumphs and surprises the market. Under that scenario I'd expect the Aussie dollar will be at least a cent lower against the US dollar and get absolutely hammered on the Euro and Yen crosses.
But assuming the market is right and Clinton has a lock on the presidency the next big question for traders is what's next for the Aussie.
I continue to believe the fundamental positives we've been discussing will underpin it. But assuming a Clinton victory also means giving clear air for the Federal Reserve to follow through on its promise and raise rates in December.
That's likely to help the US dollar strength across the board and could be the barrier that holds the Aussie up at this years high. Don't forget that price is a massive Fibonacci level. So while it's expected to hold initially again the eventual break will usher in a strong surge in the Aussie.
Here's the weekly chart showing the convergence from two time-frames of fibo's.
Have a great day's trading