Trading the Australian Dollar
Australia is a major producer of raw materials, particularly base metals, and as such its currency has been boosted by increasing global demand for its products. After the Japanese yen, the Australian dollar (also referred to as the Aussie by currency traders) is arguably the most widely held currency in the Asia Pacific region, and is ranked number five in the world in terms of daily volume. In 2010 it accounted for 7 of total global FX trading volumes.
The Aussie has been around since 1967, when Australia left the sterling area following the British pound’s devaluation against the US dollar. It only became a free-trading currency in 1983, when Australian prime minister Bob Hawke cancelled its previous peg to a basket of other currencies.
Forex traders like the AUD for a number of reasons, including Australia’s exposure to the commodities price cycle, to the booming Asian economies (Australia has been a direct beneficiary of China’s economic growth), and the fact that it is not one of the Big Four currencies most commonly traded (the US dollar, the Japanese yen, the euro, and the British pound). The currency tends to perform worse during bust cycles, as global demand for commodities slumps, but outperforms the more popular currencies in boom times. Australia was the first major developed nation to start raising its interest rates in the wake of the 2007-08 crisis. Australia also never entered a technical recession during this period.
Australia has an independent central bank, the Reserve Bank of Australia, which is responsible for setting interest rates. Currency analysts and economists favour Australia because of its sound monetary policy and its political stability, as well as the AUD’s correlation with resources prices.
Latest Australian Dollar News
Taking some chips off the table – trader’s weekly playbook
As the US election noise ramps up, traders also face the challenge of messy US nonfarm payrolls and a massive week of US corporate earnings
Technical Analysis: US data a possible volatility event risk
Traders will be looking for a series (and trend) of weaker growth data prints for the USD to take another leg lower
Technical Analysis: Traders eyeing Fed chair testimony
Traders look towards interest rate pricing, which could be impacted by Fed chair Jay Powell’s testimony to the Senate Banking Committee
Technical Analysis: a major move for GBPAUD?
Looking at the calendar this week, Aussie wages and employment, and UK CPI jump out as event key risks and potential price catalysts
Traders turning to commodity-based currencies as prices surge
Across all major currency pairs, CAD has been the strongest performer against the dollar gaining +5.5% in 2021 thus far.
What is driving the USD, EUR, JPY, AUD currency markets?
Bond markets are likely to have a significant influence over major currencies like the USD, EUR, JPY and AUD as the global economy recovers
Key thematic for 2021: Inflation testing the resolve of central banks
The US Dollar continues to be shunned and this holds ever greater implications for global economics and markets. 2021 looks set to be an interesting year
AUDNZD: trading central bank divergence
One play that can be incredibly effective in macro thematic trading is trading central bank policy divergence and AUDNZD is catching up to fundamentals
Chinese Renminbi: the Canary in the coal mine?
While the Chinese Renminbi’s depreciation has been modest, it does suggest that Chinese policy-makers are sending the United States a clear message
Conservative FX markets testing (some) extremes
Markets grappling with macroeconomic events and the likely future shape of domestic and global GDP growth rates have on the whole opted for a conservative approach
Range-trade making a comeback as global FX volatility falls
Seismic daily currency moves have given way to a range-bound US Dollar in the past fortnight with a number of major currencies currently trading broadly in the middle of comparatively narrow ranges
From black swans to flightless doves
Markets, it would seem, are giving greater billing to imaginative fiscal measures than to old “tried-and-tested monetary measures. All eyes are now on the US Senate
UK labour market remains resilient
AUD a key underperformer yesterday on a weaker employment report