One of the stronger correlations (over time) between currencies and commodities is the strong Australia Dollar and Copper correlation:
Today, copper made a significant surge lower breaking key technical support at 2.88. At minimum, copper looks set to test the 2.50 (Fibo) support:
If you take a good look at the AUD/USD weekly chart, it looks set to test below .8000:
For the last couple years I have been looking forward to getting on the long side of the AUD/USD below .8000, and it looks like this time it could actually happen. However, one has to wonder….If the Dr. (Copper) has a PHD in economics, what is this current move suggesting? Some would think that the good doctor has either failed a few classes on the way to getting the PHD or royally screwed up his/her dissertation. But with China continuing sluggish growth (relatively speaking) and global deflationary pressures mounting, perhaps we should pay a little closer attention to what the doctor is telling us.
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I am short the AUD/USD from 2+ weeks ago.
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