See the latest Australian dollar analysis here:
Sometimes correlation is not causation. Take this from Citi:
Last week’s major themes in spot FX include:·USD strengthened broadly (0.9% in broad NEER terms; BBDXY up 0.7%; EURUSD down 0.9%) against major currencies as rising concerns around third Covid wave paused the reopening optimism and led to risk reduction across markets, although the risk-off sentiment faded into the weekend with equities and commodities recouped part of the sell-off.
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Within G10, many idiosyncratic drivers are in play, including i) GBP was resilient as the UK is leading in vaccination progress, ii) NOKand AUD closely followed crude oil and copper prices, iii)NZD depreciated significantly after the announcement from the government to curb house prices, and iv) the low yielders didn’t outperform amid the risk-off, partially tied to the recovering risk sentiment on Friday as well as their own Covid concerns (rising cases observed in Japan, the Eurozone and Switzerland).
The AUD does have a broad correlation with copper:
But it is based upon the correlation that copper and the AUD share with global growth rather than specifics.
The reason is simple. Australia is a small copper exporter:
And, if you think, as I do, that much more serious exports such as coal and iron ore are in trouble then copper will prove entirely irrelevant to country and currency.