Aberdeen Standard Investments' chief economist, Jeremy Lawson, advises not to rely on interest rate spreads as an indicator of the aussie's outlook
Lawson is also a former economist of the RBA, and he says that Australia's terms of trade and commodity prices are a better gauge of the AUD's outlook at this point in time.
Well, he's not entirely wrong. 2-year yield spreads between Australia and the US have narrowed - and has even inverted - since September last year and yet AUD/USD rose to above 0.8000 in January.
It's not the only correlation to have broken down in recent times, think USD/JPY and US 10-year yields. Markets are a little wonky at times, so as traders we must always learn to be flexible.
And if you're uncomfortable with how things are working out or you do not understand what is happening, remember that the best trade you can make is not to trade at all. Wild and irrational markets are not for everyone, so it's important that you don't lose your discipline because of FOMO.