10 Jul 2015
Correlation of AUD versus commodities - Westpac
FXStreet (Barcelona) - Martina Song of Westpac, believes that the downside break in the Aussie suggests its correlation with commodities is set to increase, having been diminished recently, and further sees AUD/USD around 0.72/0.73.
Key Quotes
“Correlations between AUD and these commodities/indexes have decreased recently while the AUD remained trapped in the 0.7550- 0.7900 range for most of the past few months. Now that AUD has finally broken out to the downside, we should see correlations begin to rise again. Risk aversion from concerns about the China outlook and Greece helped the Aussie fall below 0.7500.”
“Falling commodity prices, weaker terms of trade, and Fed normalisation of policy and stronger US dollar should see weigh on the Aussie. Ongoing demand for yield and increasing demand for Australian equity should see AUD sticky on the downside around 0.72/0.73 though.”
Key Quotes
“Correlations between AUD and these commodities/indexes have decreased recently while the AUD remained trapped in the 0.7550- 0.7900 range for most of the past few months. Now that AUD has finally broken out to the downside, we should see correlations begin to rise again. Risk aversion from concerns about the China outlook and Greece helped the Aussie fall below 0.7500.”
“Falling commodity prices, weaker terms of trade, and Fed normalisation of policy and stronger US dollar should see weigh on the Aussie. Ongoing demand for yield and increasing demand for Australian equity should see AUD sticky on the downside around 0.72/0.73 though.”