AUDUSD Technical Analysis and Correlation With Gold
The AUDUSD is one of the most widely traded currencies in the world. It is based on the Australian dollar and the US dollar. However, there are many things to consider when trading it. These include its Technical analysis, Trade-relations between the two countries, and its correlation with gold.
Economic stability
The Australian Dollar is the fifth most traded currency in the world. It was introduced in 1966 and is pegged to the UK sterling.
Australia is a small nation with an economy that is highly dependent on mining commodities and agricultural exports. Its biggest trading partner is China, with the two countries running a trade surplus.
Since 2011, the Aussie has been under the microscope due to a slump in commodity prices. This has led to a rapid depreciation in the exchange rate.
The Reserve Bank of Australia (RBA) has taken inflation seriously. They have raised their cash rate target by 25 basis points to 3.10%. However, the RBA has made no habit of intervention in the currency market.
Despite the fact that the Federal Reserve has signalled an aggressive series of rate hikes, the AUD is unlikely to weaken from its counter-cyclical position.
Trade-relations between Australia and the US
Trade-relations between Australia and the United States are extensive and strong. They are marked by deep cultural and academic ties, sporting rivalry, and the importance of research and development. In fact, Australia is one of the top economic partners of the United States.
The relationship between the two countries is based on strong people-to-people ties and the shared interests of democracy and free trade. A wide variety of goods is imported by Americans from Australia. Several key imports from Australia are medical instruments, such as specialized surgical equipment and optical and medical instruments.
The relationship is strengthened by a mutual legal assistance treaty, which enhances bilateral cooperation on legal issues. Both nations are members of several international organizations, such as the World Trade Organization, the Organization for Economic Cooperation and Development, and the ASEAN Regional Forum.
Volatility
The Aussie dollar has been one of the more volatile currencies in recent years. But the Australian economy looks healthier than some of the world’s developed economies.
Aside from the usual suspects, AUD is also heavily tied to commodity prices. This is not a good thing, given the fact that higher commodity prices can cause recessionary pressures in developed nations.
Similarly, higher interest rates in Australia are another reason the AUD is more attractive. The Reserve Bank of Australia has not made frequent interventions in the currency market. It has instead chosen to keep interest rates at their historically high levels.
Another factor that may be a contributing factor to the Australian’s volatility is the fact that it is an unusually counter-cyclical currency. As such, its value is positively correlated with global spot commodity prices.
Correlation with gold
There are several things to know about the correlation between gold and AUD/USD. For starters, the two currencies have a positive correlation, which means that they go up and down together. The most common way to trade them is to do a pair trade.
Pair trading is a trading strategy that involves the simultaneous purchase and sale of assets. It’s most often applied to equities, but can also be applied to other instruments, such as currency pairs.
As a trader, you may find yourself wondering, what are the correlations between the two major currencies? How can you leverage them to your advantage? These are important because they can give you insight into the direction of the underlying asset. You can use this knowledge to hedge your portfolio and make better risk management decisions.
Technical analysis
AUDUSD is an influential currency pair, accounting for over 5% of the entire Forex market. Its volatility makes it a very important asset for traders.
The AUD/USD chart has been trading in an ascending channel for the last couple of weeks. The pair has been in the 0.6800-0.6989 range. A sustained break above 0.6920 could spark a large rally.
The AUD has also been on the rebound recently. However, the latest growth is not due to economic growth.
Australia’s unemployment rate rose to 3.5% in August from 3.4% in July. These statistics were not expected, but they did have a negative effect on the currency.
As the economy improves, the upside potential for the Aussie is high. If the RBA cuts rates, this could spur a rise in the currency.