The Nasdaq is up 10% year-to-date and the Australian dollar is negative year-to-date. It’s not a branch that I expect to continue.
To be sure, part of that is explained by the strong US dollar and rising expectations that the Fed will raise rates and sustain them over the long term, but the AUD/USD has an effective way of capturing global growth and the recent I don’t want to see an upturn. It also highlights the rapid (perhaps premature) deterioration in markets on the subject of China’s reopening.
AUD/USD is a great chart for techies where the 200-day moving average is currently being tested. There is also a well-defined head and shoulders pattern targeting 0.6500 in play.
All of this is a cautionary tale, but it’s also an odd move given that markets are arguably more optimistic about global economic growth in 2023. i don’t think so. That’s why I’m skeptical of technical signals here.
In short, technicals and fundamentals don’t rhyme so far.