Investors are talking about the Australian dollar as a yield play, but this strategist says it's not that simple.
With recessions or economic slowdowns underway in many G10 countries, the Australian dollar's high yield has a definite appeal instead of just a proxy for risk appetite.
But Adam Cole, head of currency strategy at RBC, says it's complicated.
The Aussie "is still very strongly a proxy for global risk appetite," he says, especially when traded against the dollar. That is, when risk appetite is improving, it makes sense to buy the Aussie, and vice versa.
That said, using the Australian dollar as a yield play can make sense, Cole told CNBC. The thing is, "you have to look at a slightly smarter way of doing it by crossing it against one of the other commodity currencies."
Cole especially likes selling the Australian dollar against the Canadian dollar. "We like playing the rather negative news flow in Australia against a slightly more positive background in Canada, crossing one currency against the other and washing out the risk proxy aspect of that trade."