Cracks in an ETF following the Australian dollar earlier this year was a warning sign to investors that U.S. stocks could be in for a choppy ride.
“Investors should be at least a little concerned by recent weakness in an ETF pegged to the Australian dollar since the currency has been a fairly reliable leading indicator for U.S. stocks,” ETFtrends reported in late March. [Australian Dollar ETF Performance is Caution Flag]
The currency ETF follows the movement of the Australian dollar versus the U.S. greenback.
Some technical analysts keep an eye on the Australian dollar as an indicator of global risk appetite. The currency is linked to sentiment on commodities and emerging markets.
The Australian dollar is nearing parity with the U.S. greenback after trading sharply lower in May.