$A tumbles as Trump elected president

Marty Silk

The Australian dollar is sharply weaker as market fear the economic consequences of Republican Donald Trump's presidential election victory.

At 1700 AEDT on Wednesday, the local unit was trading at 76.19 US cents, down sharply from 77.04 US cents on Tuesday.

The Aussie dollar hit a six month high of 77.72 US cents early on Wednesday morning, but as the US vote count progressed, and increasingly indicated a victory for Mr Trump, the local currency fell sharply.

The rollercoaster ride continued late on Wednesday as Mr Trump claimed victory, with the Australian dollar gaining some ground to be at 76.78 US cents as he delivered his acceptance speech.

Many investors had expected a victory for the Democrats, at least for presidential candidate Hillary Clinton, if not for the US Senate, Westpac chief currency strategist Robert Rennie said.

With the Republicans winning control of the US House and in front in the Senate race, investors are concerned US policy could be shifted in many areas, he said.

"Not surprisingly that's seen a variety of markets drop - S&P futures hit a five per cent limit, US dollar versus yen has seen very aggressive swings, and not surprisingly in that situation the Aussie dollar has also been under pressure as well, and I tend to think that story probably continues," Mr Rennie said.

The biggest concern for Aussie dollar investors is Mr Trump's position on trade with China, and the impact on commodity prices, he added.

The potential for a confrontation between the US and China buoyed most major currencies against the greenback.

"The one economy that stands to lose the most from confrontation is China and clearly the Australian economy is heavy leveraged into that country," Mr Rennie said.

CommSec chief economist Craig James said the Aussie dollar was still firm near 76 US cents, supported by higher iron ore and coal prices.

He agreed that an isolationist US trade policy, or confrontational approach, would put further downward pressure on the Aussie dollar, but a fall in the local currency would have benefits.

"A weaker currency would be supportive for export and import-replacement businesses," Mr James said.

CURRENCY SNAPSHOT AT 1700 AEDT ON WEDNESDAY

One Australian dollar buys:


  • 76.19 US cents, from 77.04 cents on Tuesday


  • 77.53 Japanese yen, from 80.39 yen


  • 67.61 euro cents, from 69.77 euro cents


  • 60.93 British pence, from 62.13 British pence


  • 104.21 New Zealand cents, from 105.11 NZ cents

GOLD:

The spot price of gold in Sydney at 1700 AEDT was $US1,325.07 per fine ounce, up $US41.97 from $US1,283.10 on Tuesday.

BOND SNAPSHOT AT 1630 AEDT:


  • CGS 5.25 per cent March 2019 1.559pct, from 1.686pct on Tuesday


  • CGS 4.25pct April 2026, 2.172pct, from 2.306pct

Sydney Futures Exchange prices:


  • December 2016 10-year bond futures contract at 97.81 (indicating a yield of 2.19 pct), up from 97.675 (2.325pct) from Tuesday.


  • December 2016 3-year bond futures contract at 98.44 (1.56pct), up from 98.3 (1.7pct) from Tuesday.

(*Currency closes taken at 1700 AEDT previous local session, bond market closes taken at 1630 AEDT previous local session)

Source: IRESS