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15 Apr 2013
Forex Flash: AUD/USD almost hit 1.06 before Yen influence hit - BBH
FXstreet.com (Barcelona) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman notes that AUD/USD reached almost $1.06 before the unwinding of cross positions against the yen took a toll (as it appears to have done on the other major currencies as well to varying degrees).
He adds that some observers linked the heavier tone of the Aussie before the weekend to the slide in steep slide in gold prices. While possible, his work shows a very weak correlation between Australian dollar and gold. In fact, on a rolling-60 day basis, using percentage change, the correlation is at its lowest since Q4 '11 just below 0.20. He writes, “Running the correlation on the level of the Australian dollar and the level of gold, correlation is roughly the same. The Aussie should find support in the $1.0440-60 band and this will allow it to challenge its 8-month cap near $1.06. Similarly a break would warn that the cap once again held and the Australian dollar may be headed back into the $1.0300-50 area. “
He adds that some observers linked the heavier tone of the Aussie before the weekend to the slide in steep slide in gold prices. While possible, his work shows a very weak correlation between Australian dollar and gold. In fact, on a rolling-60 day basis, using percentage change, the correlation is at its lowest since Q4 '11 just below 0.20. He writes, “Running the correlation on the level of the Australian dollar and the level of gold, correlation is roughly the same. The Aussie should find support in the $1.0440-60 band and this will allow it to challenge its 8-month cap near $1.06. Similarly a break would warn that the cap once again held and the Australian dollar may be headed back into the $1.0300-50 area. “