After 6 trading days of "risk on", comments from the German Finance Ministry have sparked selling across forex, commodity and share markets. This could point traders to a short position in AUD.
Charts of the S&P500 and Australian 200 share indices show we are 2-3% from the top of a roughly 12% trading range - suggesting there may be room for the selling to gather momentum.
Naturally, the AUD is likely to be vulnerable to selling in this environment. However, some traders may be reluctant to sell AUD against USD, given the potential for the negative news out of the US.
The chart of AUD/CAD from our platform may illustrate a better "risk off" trade.
While CAD is also considered a risk currency, the positioning of this pair at the top of the recent trading range, and the revertion back through the Bollinger Band around 1.0425 may mean it is a better short trade to take advantage of prevailing market conditions.