Good question.
The relationship is not one to one. There are too many factors affecting the Ozzie Dollar to make a one on one relationship; e.g., commodity prices, Australian interest rates.
Sometimes the Ozzie leads, sometimes it follows.
But if it starts to fall - look out below for our stock market. They set up a negative feed back loop.
The Ozzie Dollar currently has a much more bullish profile than the Australian stock market. That to me is bullish for our market, since there is less temptation to take money out of our country. But the whole thing is much too complex to make a one to one relationship.
I do know that many U.S. short term traders look to the AUD/USD as a leading short term indicator for the American market. (and therefore our market).
It's referred to as "risk on / risk off". AUD/USD rising - risk on. AUD/USD falling - risk off. It's a cipher, if you like, for world asset prices. But that's quite different from looking at the big trends.
Dunno whether that helps. Or why exactly you asked the question - or what was behind it.
Good luck
Redb
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