The drop in AUD/USD drop is not born out of risk aversion.
Australian trade with China is a concern if China is hurt by the intensifying trade war, but weaker AUD/USD is caused by big changes in interest rate differentials.
In that respect, the continuing fall has been fuelled by rising risk appetite.
Since Donald Trump fired up the trade war with China, AUD/USD has fallen around 1.5 percent, but it's down around 4 percent in the last month and 15 percent in the past year.
During that year, yields on benchmark bonds have moved in favour of the U.S. dollar, around 90 bps for the 10-year.
Forwards that once made AUD such an attractive investment favour the USD.
A one-year forward swap 56 bps favour USD, compared with 2011 when rates were over 500 pips in favour of the AUD.
AUD vol is relatively low, Australian stocks are within 600 pips of all-time highs.
Expectations the RBA may cut rates are rising, AUD/USD should keep falling.
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