The currency pair AUD / USD belongs to the group of " Forex Majors " - the most important currency pairs in global currency trading. The US dollar as the world's leading currency and the Australian dollar as the classic "commodity dollar" can be traded against each other with practically infinite liquidity.
Market participants who trade long in AUD / USD expect the Australian dollar to appreciate, Conversely, as with all currency pairs, traders who trade a short position in the Australian dollar US dollar currency pair are betting on an appreciation of the greenback.
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Characteristics of AUD / USD Currency pairs:
- Good to very good liquidity
- Belongs to the famous Forex Majors
- One of the most profitable currency pairs
- Commodity Play
- Particularly popular in options trading
Trading AUD / USD with Forex: Process of a currency transaction
To be able to trade the US dollar and open a position on the FX market, market participants have to carry out two transactions. The components of a currency transaction are to be explained using the example of a long position - the same applies vice versa for a short position. In the first step, the investor borrows USD, which he expects to depreciate. In the second step (carried out at the same time in practice), the investor acquires AUD with the borrowed USD liquidity. A long position in AUD / USD thus consists of a loan in USD and a credit in AUD. If the investor's bill comes up and the USD depreciates, the liabilities at the current exchange rate are worth less than the credit. Then it is possible to exchange the AUD credit for USD, pay off the entire loan and do not have to use the entire credit for this. What remains is the profit.
When trading the Australian dollar and the US dollar, the trader benefits from the comparatively stable exchange rate of the commodity dollar.
AUD / USD exchange rate in quantity and price quotation
Exchange rates can be displayed in two different formats. The quantity quotation indicates how many units USD 1.00 are paid on the market for AUD 1.00. The price quotation indicates how many units AUD have to be paid for USD 1.00. The price quotation is the reciprocal of the quantity quotation. If the Australian dollar US dollar exchange rate is quoted in price, an appreciation of the USD leads to a downward-facing chart.
The exchange rate of the currency pair AUD / USD can be in both the quotes and in the price quotation. Quantity listing is used most often.
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The Forex Major under the microscope and the connection to other currencies
When trading the AUD / USD currency pair, the focus is not only on the historical development and the current market data. In order to make good trading decisions, the decisions of the US Central Bank, Federal Reserve, or Fed, or the Australian Central Bank, the Reserve Bank of Australia, or RBA, must be observed. a must. Even if the RBA only intervenes on 5% of the trading days on average.
Since Australia has the second largest gold deposit after China, the Australian dollar plays a central role in gold trading. For this reason, there is a good correlation between the Australian dollar and the gold price. In addition to Japan, Australia also plays a key role in the forex trading. The country's economy is characterized by stability and growth. These factors influence the currency pair AUD / USD.
Both currencies are based on a strong raw material supply. Australia has a clear focus on resource extraction, processing or extraction of energy and export business. Stable trade relations on the part of the Australian dollar result in a largely stable exchange rate that strongly opposes the US dollar.
From September 2012 to summer 2013 the currency pair showed a clear sideways trend. This ultimately ended in a downward trend. Developments like this make it clear that risk-averse traders are right on this currency pair with a trend-based forex strategy. The currency combination AUD / USD is also referred to in technical jargon as Commodity Play. The aim is to target the high mineral reserves in both countries and the focus on mining. Due to the high income from exports, the Australian dollar is also known as the commodity dollar.
In combination with the course of the US dollar, the Australian dollar has been more stable against the US dollar in the past. In the worldwide currency ranking, the Australian dollar ranks 6th among the most traded currencies.
The extent to which external effects can influence the course of the Australian dollar was not least due to the global financial crisis of the year To see in 2008. The course of the course is influenced in terms of historical development primarily by worldwide crises or crises in exporting countries. With this knowledge, it is advisable to keep an eye on the countries to which Australia exports.
In the past, international crises and conflicts had an impact on the stability of the Australian dollar. This was not least reflected in a weaker position against the US dollar.
Forex strategies for the currency pair AUD / USD
heard when trading with the AUD / USD currency pair the preferred trade strategy is the carry trade strategy. This is characterized by profit potential that can be achieved in the long term. This strategy should never be used during a crisis or long-term correction. The ideal times for this forex strategy are when the economic growth of the reference country will potentially increase. In the course of the carry trade strategy, a currency with a high interest rate is bought and at the same time currency with a low one Interest rate sold. The dealer profit is made up of the exchange rate fluctuations AND the interest. This strategy is usually kept overnight. The condition is that the forex broker monetarily recognizes positions held accordingly. If a large number of traders rely on this strategy, the currency pair AUD / USD can also be referred to as a carry trade currency for the time being -Trade currency pair. In addition to the carry trade strategy, the classic Forex trend following strategy is recommended for the AUD / USD currency pair.
Many traders opt for the carry trade strategy in times of high growth in Australia. The trend following strategy is also one of the popular Forex strategies in connection with the Australian dollar US dollar.
Conclusion: It is worthwhile to keep an eye on AUD / USD
The broad stability of the Australian dollar makes the AUD / USD trading Forex attractive at all times. Both newcomers to Forex and risk-averse traders can create good opportunities with this currency pair. Due to the high economic and political influence of the USA, as well as the key currency function of the American dollar, a permanent risk remains.
Traders of this currency pair must be resourceful when it comes to direct trading to the respective business hours. While the Asia session, respectively the Sydney session runs from 10 p.m. to 7 a.m.GMT, the American session, respectively the New York session, starts at 1 p.m. and ends at 10 p.m. GMT. There is no overlap between the two sessions. Traders of the AUD / USD currency pair should be aware of this.
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