The Australian dollar (AUD) remained under pressure on Tuesday while the US dollar (USD) strengthened, fueled by rising market speculation that Donald Trump could secure a second term in the upcoming U.S. elections. The prospect of Trump’s return to office has driven the USD higher, putting additional strain on other currencies like the AUD.
The AUD, already facing challenges from domestic economic factors, has struggled to gain momentum as traders turn to the USD amid expectations that Trump’s potential victory would bring pro-business policies. Markets are betting that his re-election could lead to stronger economic growth in the U.S., further boosting the dollar.
In contrast, the Australian dollar has been weighed down by local economic issues, including a sluggish recovery and falling commodity prices. With little support from domestic economic data, the AUD is particularly vulnerable to shifts in the USD.
Adding to the USD’s appeal is robust U.S. economic data, which has reinforced the view that the Federal Reserve could maintain higher interest rates for an extended period. This has made the dollar more attractive compared to higher-risk currencies like the AUD.
(Source: FXStreet)
Analysts suggest that if Trump’s chances of winning the U.S. election continue to rise, the USD could remain strong. However, any change in the political landscape or polling could quickly shift currency flows. For the time being, the Australian dollar remains under pressure, with the USD benefiting from political speculation and a resilient U.S. economy. As the USD continues its upward trend, the AUD’s outlook remains uncertain, with further developments in U.S. politics likely to determine the future direction of both currencies. Traders are closely monitoring potential changes in sentiment or economic data that could alter the balance between the AUD and USD.
