AUD/USD rebounds from multi-month low, finds support ahead of 0.6500 mark

• AUD/USD slumps to a multi-month low amid the Trump enthusiasm-led USD rally.
• Fears of fresh tariffs and trade war with China further exert pressure on the Aussie. 
• The RBA's hawkish stance and the risk-on impulse help limit losses for the major.

The AUD/USD pair trims a part of heavy intraday losses and recovers around 70-75 pips from the vicinity of the 0.6500 psychological mark, or its lowest level since August 8 touched earlier this Wednesday. Spot prices, however, remain deep in negative territory through the first half of the European session and currently trade just below the 0.6600 mark, still down over 0.85% for the day.

The sharp intraday fall of over 130 pips for the AUD/USD pair was led by a strong pickup in the US Dollar (USD) demand. In fact, the USD Index (DXY) shot to a four-month top after the US presidential election exit polls showed that Republican nominee Donald Trump is leading the race. Furthermore, Republicans are projected to take the majority of the House after securing the Senate. 

Meanwhile, a Trump presidency revives fears about the launch of fresh tariffs and a trade war with China, which further weighs on the China-proxy Australian Dollar (AUD). Moreover, deficit-spending concerns and bets for smaller rate cuts by the Federal Reserve (Fed) push the US Treasury bond yields higher, further underpinning the USD and exerting pressure on the AUD/USD pair. 

That said, the risk-on impulse - as depicted by a sharp rally in the US equity futures - prompts some profit-taking around the safe-haven Greenback. Apart from this, the Reserve Bank of Australia's (RBA) hawkish stance and signs that China's big stimulus push is helping improve business conditions limit losses for the Aussie, prompting intraday short-covering around the AUD/USD pair. 

It, however, remains to be seen if spot prices can build on momentum or if the attempted recovery is seen as a selling opportunity amid the underlying strong bullish sentiment surrounding the USD. Hence, it will be prudent to wait for strong follow-through buying before confirming that the AUD/USD pair has formed a near-term bottom and positioning for any further appreciating move.