How to Trade the AUDUSD Currency Pair
The AUDUSD currency pair is traded on major global financial exchanges, and the market is typically busier during working hours. Traders should avoid trading during tight range-bound market conditions, especially during periods of rising volatility. While forex trading is open 24 hours a day, certain time periods have higher volatility and volume than others. Typically, the biggest daily moves happen during the Australian trading session, which overlaps with the Asian trading session. Traders should pay special attention to news releases, as they can trigger major shifts in market sentiment.
Traders who trade the AUD/USD currency pair should understand the fundamental and technical analysis behind the market. The economic forces that drive the price movement are important to consider, since the AUD/USD is a commodity. Also, traders should look at currency correlations. This is an important consideration because the success of one currency pair will likely affect the value of the other. Typically, the correlation is -1 to +1, although this may change over time.
The AUD/USD currency pair has an attractive history. The country has a history of thriving exports and commodities, and its GDP has consistently grown year after year. The country’s trading relationship with China has largely kept it out of the global financial crisis. With a rapidly rising GDP, it is a compelling proposition to invest in currency pairs in this country. Several trading vehicles can be used to trade the AUD/USD currency pair.
The Australian dollar follows the trends of global financial markets, including the movement of equity markets. A positive economy, for example, can encourage more risk taking and demand for Australian dollars. Investors in other financial markets react similarly to these changes. That’s why the Australian dollar has been able to track global equity markets for the past several decades. So, when should an investor buy Australian dollars? If they are unsure, they should look elsewhere. They should also consider the currency’s history.
The Australian dollar is one of the world’s most cyclical commodities, and its value can dramatically change in just a few hours. Compared to the USD, the AUD/USD can move up or down by fifty to one hundred pips. Large price movements are usually reversed within a few hours. Despite this volatility, the AUD/USD is a great option for investors and forex traders. Traders should keep in mind that the AUDUSD currency pair is very liquid and largely determined by the prices of commodities exported by Australia.
The Federal Reserve is responsible for determining monetary policy in the United States. Their dual mandate means that they must maintain low inflation while structural unemployment remains high. While the Federal Reserve often intervenes in the market to maintain price stability and prop up the economy, the Australian side generally drives the movement of the pair. And, while the Federal Reserve’s role in determining the direction of the currency is more complex, it is important to understand the role that monetary policy plays in its movement.
When trading in the AUDUSD currency pair, it is important to keep in mind that the Australian dollar is the fifth most traded currency in the world. The US dollar is the most widely traded currency pair in forex trading. In fact, it is the most traded currency pair on the market, with a trading range between one pip and three pip. Furthermore, the Australian dollar has tight spreads – typically AUDUSD stays within a one to three pip range on most forex brokers.
While there are numerous factors that affect currency values, Australian-US trade relations are the most prominent. Australia receives 860.9 billion dollars in US investment each year and is a trusted trading partner. Furthermore, the AU/USD currency pair is a major beneficiary of the Australian-US Free Trade Agreement (AUFTA). The AUFTA was first implemented in 2005 and has significantly increased the amount of US goods exported to Australia since its implementation.
The Aussie dollar is a highly liquid currency and is one of the most active trading currencies in the world. The Australian dollar is a decimal currency that has a strong correlation with commodities. As a result, it has historically been a riskier asset. However, a record low interest rate has reduced the risk of investing in it. It is also a proxy for the Chinese Yuan, and has material influence on the Australian dollar. This makes AUD/USD the fourth-most-liquid currency pair and accounts for around 6% of all forex transactions.
While the AUDUSD is consolidating below key resistance, long-term price analysis indicates that a cyclical downturn is due. Once the 0.7800 level is breached, the pair is likely to resume its primary uptrend. If this happens, it could push up past the 0.7600 psychological level and reach the 0.8100 resistance level. However, the market is unable to regain the psychologically pivotal 0.7100 level and could fall further to 0.7860.