The Australian Dollar (AUD) came into existence in February 1966 when the government decided to replace pounds and shillings with dollars and cents. Since then, the AUD has come a long way and is currently known as the commodity currency due to the country’s major dependence on raw material exports. This is the fifth most traded currency in the forex market and requires proper 1 AUD to USD forecast before a trader considers investment in this pair in foreign exchange.
Importance of 1 AUD to USD forecast
Historical data reveals that the market quote of AUD/USD stood at around 1.0500 in 2013, which fell to 0.9000 in 2014. It further declined to 0.8300 in 2015 and currently holds at 0.7500 in 2016. A market analysis and forecast would have revealed this trend in 2013 and many traders must have invested accordingly.
If you, as a trader, hold AUD currently priced at 0.83, then AUD/USD exchange rate forecast 2015 will show that the currency will not rise above the current market price over the next one and half years. It is then wise to sell AUD to stop loss and go for other rising currency pair.
Again, as a trader, if you intend to buy AUD, say with EUR or USD, it is certainly not wise to make the purchase in 2015. Instead wait for the currency to hit a low of 0.7000 somewhere in 2016, predicted by AUD/USD exchange rate forecast 2015, and buy it then. From here, the currency valuation will only go up, given Australia’s economic growth and sell accordingly to make a profit.
AUD – global and economic impact
The AUD is affected by China and other Asian import markets as Australia is heavily dependent on its exports to the Asian countries. A shift in Asian economy or political scenarios will affect AUD apart from the country’s economic conditions. Recently, China has decreased its import rate by a substantial percentage, and this may affect AUD’s valuation.
However, as of 2016, economic growth in Australia is around 3.3%. The country is also showing a steady 1.0% inflation rate and 1.5% cash rate. Proper forecasting will take into consideration all these factors simultaneously and generate a future behaviour-plot for AUD to US dollar currency exchange rate forecast. Fluctuations can be predicted, and orders can be placed accordingly.
The carry trade concept
This is where a trader borrows a currency with low interest rates and uses it to purchase a currency with high interest rate. The trader then lends out this new currency and makes a profit due to the difference in interest rates.
Mostly, traders in forex market use Japanese Yen to buy AUD. Interest rates of Japan are quite low due to its strong economy. Australia, on the other hand, lends out AUD at high rates. Traders make use of this difference.
Interest rates are dependent on the country’s economic condition, and this again can be determined by proper forecasting. Thus, through 1 AUD to USD forecast, an investor can not only predict the market valuation of AUD but can also go for other methods of investing. Find out more about this and other currency pairs before starting forex trading.