The USD Index had its strongest week in over two months as better-than-expected GDP numbers, combined with hawkish comments from FED officials, lifted the Greenback against all the major currency pairs.
The bulk of the gains were against the EURO and YEN, with the AUD/USD finishing the week pretty much unchanged.
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We don’t expect this to last. With the RBA overnight interest rate policy firmly on hold, the divergence of interest rate policy trajectory between the USA and Australia will push the AUD/USD lower.
Technically, the AUD/USD closed the week below the 30-day moving average with the RSI momentum indicators pointing lower. We see the first key support level at .7580 and have a medium-term target near the January low of .7160.
Investors who want to profit from the a lower AUD/USD can look to buy the BetaShare YANK ETF. YANK is an inverse ETF with a 2.5% weighting. This means that the share price of YANK will increase by 2.5% for every 1% fall in the AUD/USD.
With the YANK currently priced around $14.20, we estimate the share price to rise to $16.40 when the AUD/USD reaches .7160.
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