AUD/USD is an abbreviation for Australian dollar slash U.S. dollar. It is commonly used to identify how much U.S. dollar is required to buy an Australian dollar, the amount varies constantly in Forex trading based on some factors and this article offers to analyze such factors.
UNDERSTANDING AUD/USD FOREX ANALYSIS
Due to the fact that the government does not intervene in the forex market and also base on the stability of the economy and government concerned in this pair, AUD/USD has been a popular trading pair in the forex market. The AUD which is the official internally certified currency of the common wealth of Australia also known as "Aussie" has one of the highest exchanges making it the sixth most traded currency in the forex market. Its value is dependent solely on commodities exported such as minerals and agricultural products and at such the price of AUD to USD booms when the demand of minerals increases and falls when demand is low. AUD/USD is always noticed to be moving in opposite direction in comparison to other major currencies in the global economy this account also to a large extent why the pair is preferred over many others.
PERIOD WHEN AUD APPRECIATES AGAINST USD
In situations such as great deficit in U.S current account
When the rise in product price is to AUD benefit
And also when US interest rate drops drastically below Australia.
EVALUATING THE AUSTRALIAN DOLLAR
Other factors that affect the AUD other than U.S Australian exchange rate are other currencies like the Japanese yen, Euro, and also importation. Just like the Canadian dollar, it is a commodity currency and its value is highly dependent on the price of gold, nickel, wood, copper and coal. Mainly as the price of gold increases the Australian dollar increases as well.
ADVANTAGES OF TRADING THE AUD/USD
The Aussie holds so many advantages in trading due to the fact that its country has a goods and export based economy, and a strong central bank foundation. Also the growth of the economy of countries like China, India and Japan which has an insatiable desire for product affects it positively leading to the rise of the value of the AUD.
FACTORS AFFECTING THE DEMAND OF AUSSIE IN FOREX TRADING
Factors like the interest rate and the high confidence level for investors of the Australian dollar increases the demand of the Australian dollar thereby increasing it value. Other factors that can affect the demand are high demand for Australian goods and services that requires the use of Australian dollar in the trade, increased capital inflow is also a determinant of the demand for Australian dollar as investors buy the AUD for Forex trading the demand and value increases.
FACTORS AFFECTING THE SUPPLY OF AUSTRALIAN DOLLAR
The factors affecting the supply of the AUD are as numerous as those that affect the demand and are the opposite of what affects the demand such as lost of confidence in the AUD, high demand for foreign goods and services by the Australians over supply etc.
The AUD/USD is a very nice currency pair with a high profit merging, but like any currency pair they are still swings and alterations which a concrete analysis prior to trading maximizes profit.
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.