Australian Dollar: RBA New Member Taking Aim at High Currency

By:dailyfx

If you want a fundamental bead on the Australian dollar in a glance, just look at the S&P 500 or any other benchmark equity index. The high yield currency is running fully on the balance of sentiment amongst the speculatively minded. This is a relationship that was further confirmed since the RBA rate decision in which the central bank unexpectedly held its benchmark lending rate. Rather than drive forward as the overly ambitious bears are forced to reprice, the Aussie dollar has held fast alongside equities and other risk-sensitive assets. To give a sense of the connection, the 20-day rolling correlation between the S&P 500 and AUDUSD is currently 0.92 (1.00 is perfect). Furthermore, that relationship hasn’t slipped below 80 percent over the past three months. However, there may be a new factor that Aussie dollar traders need to monitor. The RBA has added a new member (Heather Ridout) and she has vowed to champion the argument that the currency is excessively expensive.

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One Comment to “Australian Dollar: RBA New Member Taking Aim at High Currency”

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