The AUDUSD is a major risk-linked currency, and it is particularly sensitive to broad-based market sentiment. The AUD/USD tends to move higher during market conditions that are favorable for the country, and to depreciate during times of general market headwind. The currency’s volatility may also be influenced by the price of Australia’s main commodity exports. To make the most of your trading experience, you should learn about the AUDUSD’s correlations with other currency pairs.
Australia and the US have a strong economic relationship, and this has a direct impact on the AUDUSD. Currently, about a third of Australia’s exports are sent to China. The US is a significant trading partner for Australia, and the Australia-US Free Trade Agreement was ratified in 2005. Since then, US direct investment in Australia has soared to more than $1 billion. Since then, US exports to Australia have increased by almost double the amount they received before the ratification of the Free Trade Agreement.
Despite recent retracements, the AUDUSD has started testing its weekly support near the 0.7000 price area. If this support fails to hold, price will likely resume its downtrend. It is best to wait until the EU market opens and look for a potential breakdown of this structure. For now, wait for the EU market to open and see if the AUDUSD breaks the support area. If it does, trades should be made at that point.
Another method to follow the AUDUSD is to use news today. News today can explain seemingly obscure trends or unusual daily moves. By focusing on news, you can capitalize on this to make money in the currency market. If you are looking for forex news, DailyFX is a great place to start. This website also includes technical analysis. The IG client sentiment tool is useful for this purpose. By following news updates, you can predict the trend and trade accordingly.
Both the AUDUSD and NZDUSD experience increased volatility during certain times of the day. The most active time for both currencies is between midnight and 1700 GMT. However, the NZDUSD and EURJPY also experience higher volatility during certain periods of the day. Its most active time is between 1200 and 1700 GMT, and it can also experience some increased action in the early morning and late afternoon. With such a volatile time, the AUDUSD and NZDUSD can go up and down wildly.
The United States Federal Reserve sets monetary policy. Its dual mandate is to keep structural unemployment low and inflation low. They may intervene in the market to control inflation and prop up the economy. These movements in the pair are mostly driven by the Australian side. When the Federal Reserve meets, it is expected to raise interest rates a bit higher. After the meeting, the minutes will be published. The minutes will trigger major price movements for the currency pair.
The AUD USD is one of the few currency pairs that ensures volatility throughout the trading sessions. Although it is typically low-volatility in the Asian trading session, it springs to life in the second half of the trading day. Additionally, the AUD USD has a positive correlation with gold, NZDUSD, and USDCAD. Positive correlations imply that a currency is mirroring the other, while negative correlations mean that the opposite is true.
Another major factor affecting the AUD/USD is the economic situation of Australia. As the economy of Australia is heavily dependent on commodities, rising commodity prices are positive for the Australian dollar. In addition to this, Asian demand for Australian commodities also supports the Australian dollar’s value. However, high commodity prices could also damage the Australian economy. A strong Asian economy can boost the Australian dollar. That’s why the AUDUSD is an excellent currency pair to trade in.
The Aussie Dollar has historically been correlated with commodity prices. The Australian dollar is heavily dependent on the trade of natural resources, and historically, high yield differentials delivered a high demand for the currency. However, record low interest rates have made the Aussie Dollar a riskier asset. The Aussie is also a proxy for the Chinese Yuan, so its value fluctuates based on demand for these commodities. With a trading volume of over 6%, the AUD/USD is one of the most liquid currency pairs.