AUDUSD stands for Australian Dollar to US Dollar and is one of the most popular currencies in the world. With its low volatility, it is very attractive to traders. However, it is important to know the factors that can influence its price. Having a clear understanding of these factors is essential to successful trading.
Interest rate differentials
Historically, interest rate differentials between the US and Australia have impacted the AUD/USD exchange rate. This pair is known for its high volatility and can lead to significant financial losses.
The US Federal Reserve releases interest rates eight times a year. The Fed controls monetary policy, sets reserve requirements, and acts as lender of last resort to the banking sector during times of crisis. When the Fed raises rates, this can weaken the US dollar.
When the Federal Reserve cuts interest rates, it increases the supply of US dollars. This weakens the US dollar and makes the AUD more attractive. It also makes the Australian dollar more vulnerable to signs of weakness in the Chinese economy.
The Australian dollar has been negatively correlated with the USD/JPY and the USD/CHF. The currency has also had a negative correlation with the USD/CAD.
Government credit ratings
Despite the ongoing recession and China’s slowing economy, the Aussie is still a solid bet. It’s a commodity currency that usually benefits from a resurgent Chinese economy. It’s also worth noting that the AUD has been beaten on price by the Aussie dollar, which means the currency is a good bet in an increasingly shaky global market.
The AUD/USD pair has been snaking lower on Thursday, and while it’s not going anywhere, it’s not a great time to bet on it. As mentioned above, the pair has been beaten down in recent days, and is now trading in the mid 1.06s. That’s down 1.3 percent from its Thursday’s intraday high.
The AUD/USD pair also pulled back from its all-time high of 1.0799, which is not a good time to bet on it. The AUD/NZD pair also took a hit, falling 1.19% to 1.2695.
Traders and investors are interested in Australian dollar and commodities because of their strong links. Commodities are considered the backbone of the economy in Australia and are heavily used in the country’s trade. The Australian dollar tends to rally when the value of related commodities improves. The currency is also very influenced by interest rates.
The Reserve Bank of Australia (RBA) and the US Federal Reserve (Fed) influence the exchange rate of the AUD. These two central banks also influence each other’s interest rates. This can create a lot of liquidity in the AUD to USD market.
The US has direct influence on the Australian dollar because of its economic relationship with Australia. The US has increased exports to Australia in recent years.
This is good news for the Australian economy because it means demand for commodities. Australia is also a major exporter of minerals and ores. In the past three years, US exports to Australia have increased by over ninety percent.
Despite the omission of the Australian Dollar in the list of top ten currencies in the world, it is still amongst the most traded currencies on the planet. In fact, Australia’s AUD is the fifth most traded currency in the world. In the year 2021, the currency was trading around the $0.70 mark.
The Australian Dollar is also an official currency of several countries. It has a history going back to 1966, when it was renamed the Aussie, and replaced the pound. It is a commodity currency, based on the demand for Australia’s natural resources in Asian nations. Some of the commodities the Aussie buys in volume include coal, gold, and oil.
Despite its size, the Australian Dollar is relatively stable. This is due in large part to the country’s stable currency policies. Its economy is mixed, with the service industry accounting for almost 63 percent of total GDP.
Sentiment and speculation
Several factors affect the AUDUSD exchange rate. These include the state of the economy, the interest rates in other countries, and changes in risk sentiment. For example, a decrease in global equity markets can lead to a depreciation in the Australian dollar.
The Reserve Bank of Australia (RBA) raised its cash rate target by 25bps to 2.85%. The bank is trying to contain the recession, but this hike knocked the AUD/USD below its support level of 0.66. It is also vulnerable to deeper losses. This means that the pair is now nearing a month low. It is possible for the exchange rate to retest its psychological 0.6880 support level.
A strong increase in the Australian consumer sentiment index in August was one of the factors behind the rise in the Australian dollar. It is also expected that positive local employment numbers will boost the exchange rate.