Why is the AUDUSD Currency Pair Strong?
The AUDUSD currency pair is highly influenced by Australia-US trade relations. These two countries are important trading partners and share a close economic relationship. Since 2005, the US has invested more than $1 billion in Australia’s economy. US exports to Australia have increased by 91%. Australia is a major exporter of commodities such as iron-ore and coal. Its economy is also heavily dependent on commodity prices. Here are some of the reasons why the AUDUSD currency pair is strong.
The AUDUSD currency pair is currently testing weekly support at the price of 0.7000. After a recent retracement to 0.72700, price has started a downtrend. The break of this support level could lead to further price movement. Traders should wait until the European market opens to trade in the AUDUSD pair. This way, they can profit from any possible break of structure in the market. Alternatively, traders can use a breakout strategy or scalping strategy to trade in the AUDUSD currency pair.
The US Federal Reserve sets the monetary policy for both countries. Its dual mandate means it needs to maintain low inflation while limiting structural unemployment. The Federal Reserve intervenes in the market to prop up the economy and maintain price stability. This means that the Australian dollar is generally influenced by the United States dollar’s strength. If the Federal Reserve increases interest rates, the AUDUSD currency pair will also strengthen. However, the US Federal Reserve will be dovish and could weaken the Aussie currency.
The AUDUSD currency pair experiences increased volatility in the evening hours from midnight to 0200 GMT. It also experiences increased volatility during the morning hours between 0700 and 1000 GMT. Both currencies are most active between 1700 and 1800 GMT. The volatility levels in the AUDUSD can also be influenced by news releases. A major economic announcement can shift market sentiment significantly. Therefore, it is critical to be aware of economic reports so that you can take advantage of them.
The Australian Dollar is highly dependent on global growth and commodity prices. Therefore, the best way to trade the AUD/USD currency pair is to use CME-listed FX futures. This offers you precision risk management in AUD/USD trades and the convenience of monthly, weekly, and daily charts. You can also use bespoke indicators on your live streaming charts. This will enable you to trade in real time, via the central limit order book, with blocks, or via EFRPs.
Other factors that can influence the AUD/USD include trade relations. While trade relations with Asia and the U.S. are the most important determinants of AUD/USD, interest rate differentials also affect AUD/USD. If Australian rates are higher than U.S. rates, the Australian dollar will be more appealing. Conversely, if the U.S. rate rises, the AUD/USD could lose its attractiveness.
The AUDUSD currency pair represents the amount of Australian dollars you need to buy a US dollar. This pair is highly volatile and is one of the most popular forex trading currency pairs. In fact, it is the fourth most traded currency pair in the forex market. During the Asian trading session, volatility in this currency pair encourages traders. The AUDUSD is often traded in pairs, and is influenced heavily by commodity prices and market risk sentiment.
While many currencies have positive and negative correlations with one another, the AUD USD is one of the few that remains volatile throughout all trading sessions. While the Asian trading session is generally low-volatility, the AUDUSD will spring to life in the Asian session. Furthermore, the AUDUSD is closely correlated to gold, NZDUSD, and USD CAD. In other words, if one pair does well, the other pair will do the same.
Unlike US dollars, the AUD is highly dependent on commodities. Its value varies greatly with the price of oil, copper, and gold. The Australian dollar is the fourth most traded currency pair and accounts for 5.2% of all forex trades. It is also one of the most volatile. Therefore, it is important to understand the AUDUSD currency pair before making a trade. So, if you are interested in trading the AUDUSD currency pair, consider the information above.