Which kind of makes sense when you think about it. The Australian Dollar/US Dollar exchange rate is usually a reflection of the interest rate, economy and growth of Australia, compared to the US, two things that also factor into valuation of stocks. Also, foreign dollar inflows into the Australian sharemarket will also lift the Exchange rate, and increase the value of the ASX200 due to increased buying activity. The correlation co-efficient is pretty strong (0.69).
So if anything, a reduction in the aussie might indicate a correction about to occur on the ASX. Watch this space!
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