Key Points:
- Over the four months after the last five US presidential elections:
- The USD has rallied against AUD three out of five times
- Has increased by, on average 1.5%
- Furthermore, over the same time period the US Dollar Index (DXY), which doesn’t include AUD but is a basket of global currencies, has rallied all five times
- ANZ ETFS offers exposure to the USD via its ANZ ETFS Physical US Dollar ETF (ASX Code: ZUSD), at 0.30% MER p.a.
Summary
After the recent news on Trump’s "locker room talk" in 2005, as well as the generally agreed view that Trump also lost the second presidential debate, the current polls have Clinton in a strong position to become the first female president of the United States.
Regardless of the outcome though, in the sixteen weeks after the last five presidents have been elected, the USD has rallied against AUD three out of five times and, on average, by more than 1.5%.
The chart below shows the average change in the US/AUD currency pair in the sixteen weeks after a new president was elected over the last five elections.
Source: Bloomberg, data from 1979 to 2016. Past performance is no guarantee of future performance.
At a more global level the US Dollar Index (DXY), which is a basket of currencies but doesn’t include AUD has increased all five times, between 2% – 9%.
The chart below shows the change in the US Dollar Index (DXY) in the twenty weeks after a new president was elected.
Source: Bloomberg, data from 1979 to 2016. Past performance is no guarantee of future performance.
Ways to access USD
A USD currency ETF is an effective way to take exposure to the US but without having to invest in equity or fixed income company risk. This is especially relevant in the current climate where the election is also taking place at the same time as expectations of a further rate increase by the Federal Reserve Bank have become heightened, causing volatility across markets.
I hope this article has been of interest to you, if you have any further questions in relation to this or anything else to do with ANZ ETFS please get in touch.
