Model/hedge funds exiting AUD longs as market vols spike
The main driver behind the AUD selling this week would seem to be related to the sharp increase in market volatility.
Model funds and hedge funds had built large AUD long positions across the board in recent weeks and months, while vols were at record lows. As soon as vols started to spike, the position signals would have reversed, and trailing stops would have been set. Once these stops started going off, they started to feed on each other, leading to the AUD rout.
When these events are happening, fundamentals like the strong Australian jobs data are simply ignored.