How the AUDUSD Exchange Rate Is Influenced by the Australian-US Trade Relationship
The AUDUSD exchange rate is influenced by the Australian-US trade relationship. The two countries enjoy a close economic relationship and are trusted investment and trade partners. Since the Australia-United States Free Trade Agreement came into effect in 2005, US exports to Australia have soared by over 91%. Consequently, the AUDUSD exchange rate has a significant influence on the global economy.
The AUDUSD pair is traded between Australia and the United States and is one of the most widely traded currency pairs on the forex market. This pair is highly dependent on commodity prices, which often affects the value of the currency pair. Traders are encouraged by the volatility of the AUDUSD pair during the Asian trading sessions.
During the near-zero interest rate environment, AUDUSD continues to be a compelling carry trade alternative. The Reserve Bank of Australia has kept interest rates near historic lows, while the U.S. federal funds target rate has fallen to 0.25%. The AUDUSD has become a highly attractive carry trade alternative, which is a major reason why it is so popular with investors.
USDCAD has climbed to its highest level since 2020, but has subsequently slid back. The pair has also moved away from a key swing area on the weekly chart. It is currently testing its 100 hour moving average (MA100) and is headed toward the 200 hour MA (0.7662). The pair will have a similar trading day today despite the differences in their respective currencies. However, this pair is also susceptible to short selling due to problems with UK economic growth.
When trading the AUDUSD, it is important to consider the underlying economic forces and the underlying correlations between the two currencies. The AUDUSD is positively correlated with gold, which means that the currency will rise and fall in accordance with the other currencies. As a result, AUDUSD will often experience a spike in volatility during the Asian trading session and low volatility during the North American trading session.
Another factor influencing the AUDUSD exchange rate is Australia’s trade relationship with other countries. Trade with Asian countries influences the Australian dollar, while interest rates between Australia and the U.S. will affect its attractiveness. Rising interest rates in Australia can also impact the Australian dollar. A higher interest rate in Australia makes the Australian dollar more attractive than the U.S.
Australia exports over a third of its products to China, making it an important trading partner for AUDUSD. Trade between the two countries has increased significantly since 2005. The free trade agreement between the two countries resulted in more than $1 billion in direct foreign investment. Moreover, the US’s exports to Australia have more than doubled since then.
The Australian dollar is an important currency in the international forex and commodities market. It has a AAA Debt Rating which highlights its economic and political stability. However, it should be remembered that AUDUSD can suffer substantial losses if the trend reverses. Hence, it is imperative to have a thorough understanding of the AUDUSD relationship before you begin trading.