Want to Bet on Currency Market Risk? The Aussie Is Fast Becoming Main Game in Town
- AUD correlations with stocks higher than other DM and EM FX
- Currency one of the cheapest risk-off hedges in FX, RBC Says
Photographer: Brendon Thorne/Bloomberg
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Australia’s dollar, a favorite among traders for betting on risk in currency markets, is even more attractive than usual as a proxy, Royal Bank of Canada says.
One of the cheapest hedges against risk is to bet on declines in the Aussie, according to the bank. Another lure is that the Aussie shows an increasing correlation with equities, looking at each of the Group-of-10 pairs, strategist Elsa Lignos wrote in a note to clients Tuesday. The relationship is even stronger than those for Latin American currencies, she said.