How to Trade the Australian Dollar

AUDUSD

The Australian dollar’s value is determined by several factors. For example, trade relations between Australia and the Asian economies affect the currency‘s value. Another important factor is the difference in interest rates between Australia and the United States. Higher interest rates in Australia tend to make the currency more attractive, while lower interest rates in the U.S. may devalue the currency.

Understanding how these factors affect the AUD/USD is an important part of successful day trading. The Australian Dollar tends to be sensitive to overall market sentiment, and therefore tends to rise during favorable market conditions and decline during periods of market headwinds. In addition, AUD/USD can be influenced by the prices of the country’s major commodity exports. This is why it is beneficial to understand how the AUD/USD currency pair correlates with other currency pairs, and learn how to use these correlations to your advantage.

The AUD/USD pair is nearing the end of its downward breakout, and is pressing a crucial Fibonacci support level at 0.6855. It is also pushing a trendline from late October, which helped support the pair’s highs. However, the trendline collapsed in the first half of November, and USD weakness has since stalled the bearish move. Over the past week, the pair has been range-bound.

The Australian economy has surged in recent years through exports of commodities, and GDP is increasing each year. Its trading relationship with China has helped the country avoid the global financial crisis. The powerhouse economy of Australia makes trading with this currency pair a lucrative proposition for investors. Traders can use a variety of trading vehicles to capitalize on this opportunity.

The trade relationship between the US and Australia is also important. Both countries are trustworthy trading partners and have close ties. The Australia-US Free Trade Agreement was ratified in 2005, and since then, US exports to Australia have more than doubled. Furthermore, most commodities are denominated in US dollars.

In order to trade the AUDUSD, traders must consider the correlation between the currencies. While other pairs show a positive correlation, AUDUSD has negative correlation with the NZDUSD and USD CAD. Positive correlation means the currency pair will move in the same direction. Conversely, negative correlation means the opposite. The AUD USD is positively correlated with gold and NZDUSD. So, it is a good idea to be cautious and watch the market for signals of positive and negative correlations.

The Australian dollar appreciates when global equity markets increase, and depreciates when global equity markets fall. Therefore, the AUDUSD exchange rate will go up or down depending on these two indicators. So, the Australian dollar’s value is closely linked to the terms of trade. In other words, an increase in the terms of trade indicates a stronger economy, and a lower number means a weaker currency. And, a positive trade balance means a stronger Australian dollar.

The Australian dollar is the fifth most traded currency in the world. It is valued at 0.7500 US dollars. AUDUSD is traded through CFDs (contract for difference). In this forex trading pair, traders try to predict price movements by buying or selling CFDs. A low spread and high liquidity make it a popular currency pair.

Currency traders should have a good understanding of how the Australian dollar relates to the US dollar. The AUDUSD value is positively correlated with global spot commodity prices. This means that a decline in commodity prices could impact the AUD base rate. A slowdown in the Chinese economy could cause a fall in key commodity prices, thus impacting the AUDUSD value. But there are also opportunities to make money with AUDUSD.

The Australian dollar is connected to a number of commodities currencies. The most obvious is the New Zealand dollar, which is closely related to the Australian dollar in terms of agricultural products. New Zealand’s economy is similar to Australia’s, and they have substantial resources such as copper and iron. When the demand for these commodities increases, the Australian dollar should rise as well. The other currencies in the region are also correlated with the AUDUSD.

Gold is another asset that has a positive correlation with the AUDUSD. Australia is the third largest gold producer in the world, exporting $5 billion worth of gold each year. As a result, AUDUSD tends to go up or down in response to the price of gold. Another currency with a strong link to gold is the Swiss franc. Since the Swiss franc uses the dollar as a base currency, USD/CHF rises when the gold price goes down, while the USD/CHF falls when gold rises.