Research Team at Westpac, suggests that the AUD/USD this week rose above 0.73 for the first time since 4 January, having fallen as far as 0.6827 on 15 January. Key Quotes “As we noted last week, the correlation between daily AUD/USD movement and both the S&P 500 and crude oil prices has recently been the closest since 2013. So the Aussie’s cause has certainly been helped by the S&P 500’s rally this week to highs since 7 January and the increasingly steady gains in Brent crude oil prices to around $37/bbl, reaching highs since 5 January. The fact that each of these has only made it back to early Jan levels is a reminder of what was so upsetting to AUD, oil and equities (and many other markets) in the first few days of 2016. It was then we saw Chinese equities under heavy pressure, causing regulators to abandon their newly installed circuit-breakers, with some of the panic among Chinese investors fuelled by the sudden jump in USD/CNY from 6.49 end-Dec to just short of 6.60 on 7 Jan. Since then, China’s leash on USD/CNY has been tightened again, aside from the sharp yuan gains allowed on the first day after the lunar new year holidays. The Shanghai Composite has seen some large moves over the past month but not as spectacular as in early Jan and overall has been broadly range-bound over the past month. This has helped calm global markets and encouraged an unwinding of speculative AUD short positions. CFTC data shows leveraged funds have reduced net short AUD/USD positions in futures markets from -AUD27.5bn late Jan to -0.7bn last week. But the Aussie’s biggest gains this week came from a very traditional domestic driver: Australia’s national accounts.” For more information, read our latest forex news.