02 Jan TRADING EDUCATION: AUD USD
Trading Education: AUD USD Analysis
The AUDUSD is known colloquially within forex trading as simply the Aussie-Dollar
The AUDUSD is primarily a commodity’s currency pair. During Australia’s commodity boom traders were often attracted by the interest rate differential in the AUDUSD. This allowed traders to earn rollover for being long the AUDUSD, while also benefitting from the positive impact the commodity boom had on the AUD.
However, recently economic difficulties in China have resulted in lower prices in the metals and commodities markets and have resulted in Australia’s economy and the AUD seeing weaker long term prospects.
The AUDUSD is heavily affected by world economic factors. The Australian dollar (AUD) can and often does see significant swings in price due to the underlying demand for Iron Ore. Whilst the U.S. dollar (USD) is more dependent on domestic Job’s data and the price of light sweet Crude Oil.
For this reason, the interest rate differential between the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed) can have a significant impact on the AUDUSD. The AUD/USD tends to have a negative correlation with the USD CAD, USD CHF and USD JPY pairs due to the fact that the AUD USD is quoted in U.S. dollars.