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AUD/USD Seeing Modest Selling Pressure

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  • Traditionally, this has been an indicator for excessive valuations and often preceded a period of weakness in US stocks – triggered by rising CPI.
  • The unadjusted yield was already close to a record low but higher domestic CPI has exacerbated the move.
  • Past occurrences have delivered a median decline on the five occasions of 8% over three months and 22% over one year.
  • Of course, signs of valuation excess are no catalyst themselves for the stock market to roll over.
  • But findings like these may dampen confidence in the idea that outsized gains, similar to those seen in 2H20, lie ahead for those buying U.S. stocks today.

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MNI London Bureau | +44 020-3983-7894 |

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