Ok we know that the Australian economy is intimately tied to other Asian economies and particularly China and that growth expectations for China have been dimmed by a tighter monetary policy. However it strikes me that the Australian dollar has somehow been heavily sold over the last few month when I look at the t-stat of the daily logarithmic changes of the AUDUSD over different time windows. The first chart shows the T-stats of various exchange rates against the US$ over windows of 1 week to 6-month. The second chart shows the rolling 3-month t-stats of daily logarithmic changes of major currencies against the US$. The plotted lines are 95% interval of confidences. Clearly the AUDUSD has been significantly oversold on a statistical basis.
The Australian stock market has held well relatively to the rest of the world . The recent global surge in equities we have seen is not driven only by a rotation toward equities due to the fear of central bank rising their interest rates at some time in the not so distant future but also due to expectation economic growth.