In a span of just three months, the Australian dollar enraptured over 100 percent to become the rival activity major currency after the monetary unit. The persistence of the AUD/USD optimistic trend is outstanding and it’s partly driven by the market appetency for the carry trade, as well as the anti-dollar carry attractiveness. Going forward, as the world economic landscape changes, the Aussie rate of exchange are additional driven by the world market and also the risk-on/risk-off surroundings. The AUD/USD technical pattern remains optimistic as clearly indicated by the daily uptrend. However, as long as we have a tendency to keep below the large psychological range zero.8000 the chance will increase for a far deeper correction.
WHAT INFLUENCES THE AUD/USD EXCHANGE RATE?
The level of demand for a currency can have an effect on its value. If there are additional individuals wanting to get AUD/USD than sell it, the AUD's price can go up. Additional sellers of AUD/USD suggests that the worth of AUD can go down.
WHAT INFLUENCES WHETHER INDIVIDUALS WANT TO BUY OR NOT INCLUDE;
• The outlook for world growth
• Movements in Australia’s goods export costs, that increase or lower the nation's terms of trade – the number of cash the country brings in through exports relative to the number it spends on imports
• The gap between interest rates within the U.S.A. and Australia
• How Asian currencies like the Chinese yuan and Japanese yen are performing
WHAT DOES THIS REFLECT?
1. LOWER WORLD GROWTH
Whenever world growth forecasts are being revised down, AUD/USD tends to come below downward pressure, which suggests the Australian dollar loses price relative to the U.S.A. dollar. The U.S.A. dollar is that the world’s reserve currency and US Government bonds are considered a comparatively safe investment. Therefore, once money markets sense associate exaggerated level of risk, the demand for these ‘safe haven’ assets tends to extend.
2. COMMODITIES PRICES/TERMS OF TRADE
Australia depends heavily on trade for its economic upbeat. Commodities, as well as ore and coal, are a number of Australia's biggest export merchandise. a big fall within the costs of commodities will contribute to a pointy decline in Australia’s terms of trade. Our terms of trade may be a magnitude relation of export costs to import costs calculated by the Australian Bureau of Statistics and revealed each 3 months.
As speed demand causes the worth of Australian resources to fall, it additionally reduces the necessity for Australian greenbacks, the currency accustomed get them.
3. INTEREST RATE OF CHANGES
Interest rates have traditionally been much higher in Australia than the U.S.A. for a protracted time currently, however the momentum has been shifting.
So the appeal of buying Australian greenbacks to learn from the interest you'll earn on them relative to different currencies has worn off somewhat, and cash has been moving back to the U.S.A. in anticipation of upper rates there.
4. ASIAN CURRENCIES
More than three-quarters of Australia’s exports are direct to Asia, and AUD is usually used as a proxy for Asia. If Asian currencies are below downward pressure, normally therefore to is that the AUD/USD.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.