In this chart exercise, it becomes blatantly clear why the Aussie is often referred to as a proxy for emerging markets.
We've created an EM-weighted index with 7 currencies (Argentinian Peso, Turkish Lira, Russian Ruble, South African Rand, Chinese Yuna, Indonesian Rupiah, Indian Rupee).
Do you notice the extremely strong negative correlation? As long as the trading war keep undermining emerging markets, one can take cues from the EM index to trade the Aussie.
In the latest divergence spotted on Sept 10, notice how we were going through a recovery in emerging markets (candle chart going lower), yet the aussie remained at trend lows?