AUDUSD and NZDUSD relationship

One of the greatest traders I know wrote this article a few months ago. I got inspired and went to look for my own relationship studies between assets.

My approach is much more simpler since it’s about two currencies and their respective countries are similar in location and economic characteristics, but I still found it interesting enough to write a brief article about the case.

NZDUSD with AUDUSD overlapped as an area chart. Correlation coefficient is quite close to 1.

As we can see in this monthly chart, there’s been three times in the past where AUDUSD registered lower highs before NZDUSD started a significant downtrend. While it’s not exactly the same thing we’re seeing right now, it’s easy to spot a slow upmove in AUDUSD while NZDUSD shows important signs of getting a lot of supply to start flooding the market. Could it be the beginning of a new significant downtrend in both of them?

Although the markets are still worried about a rate hike and an upcoming election for the USA presicency, DXY is also looking strong right now, which would help AUD and NZD to fall.

Let me know what do you think.

Regards, Álvaro.