Why should investors care about the direction of the Australian $ and its breakdown?

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Many use the Australian $ as a tool to determine if they should over/under weight risk assets, since the AU$ has a decent track record of suggesting future movements in the S&P 500.

The above chart reflects that SPY has taken a few pauses in its bull market when the AU$ has hit line (1).  Of late the AU$ hit this line again and is now breaking support at (2).  Momentum is on the side of the bulls at this time. 

Has the AU$ lost its touch as a leading risk indicator?  Stay tuned!

Crude Oil is another great leading indicator for the S&P 500.  Crude is up against a resistance line, just like the AU$.  ($100 Crude help SPY post)

 

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