(18/18)
There are many variables explaining forex dynamics
Their importance evolves over time, as I have demonstrated here
Now you have a better idea of what you should pay attention to (is it RBA or commodities now?)
I hope you learned something new, full report to come!
(17/18)
In fact, as we entered Covid, watching commodities (BCOM) became more important than sentiment (EEM) for AUD
Note the crossover below:
So what's the takeaway?
While monetary policy can be a key driver of exchange rates, RBA impact on AUD has been WEAKENING over time https://t.co/Kj4zHip6YD
(16/18)
Today, BCOM has been having a stronger effect on AUD/USD than 2+ decades ago
And as we talked about earlier, this was likely due to Australia's massive trade balance surge after Covid as a key exporter (especially to China) https://t.co/MjxaP6f8AK