Currency Trading Online
The Australian Dollar: Next on our list of forex currencies is the Australian
Dollar and
AUD/US
Dollar pair.
The currency is often referred to as the Aussie for obvious
reasons. Again this is the base currency of the pair.
Currency Trading Online : Aussie Dollar
Despite the fact that Australia is a country rich in natural resources, it has one of the largest trade deficits in the world. Major exports include commodities such as aluminium, gold, and iron ore and of course wheat, whilst imports include plant and machinery, and electronic office equipment. Its major trading partners are China, Japan and the United States. The recent growth in China has led to a strengthening of the Australian economy as demand for its raw materials has grown significantly.
Currency Trading Online : Australian Economy
Australia's economy like many others in the world, is based on a service economy, with approximately 72% of it's GDP coming from the leisure, business, property and finance sectors. The Reserve Bank of Australia has the task of setting and implementing monetary policy, and the board ( strangely) meets eleven times a year, with statements being issued on the first Tuesday of each month except for January ( probably as they are still on the beach!!) Interest rates are relatively high as the RBA has raised rates to dampen house prices which have risen strongly in the last few years.
Currency Trading Online : Factors Affecting The Aussie Dollar
As a forex trader, the key relationship to understand when trading the Aussie Dollar is its relationship to gold. Australia ranks third in the world as a gold producer, and the Aussie dollar correlates directly with commodity prices. So when gold goes up in price, so does the Aussie dollar, and similarly when prices decline so does the Aussie dollar. With high interest rates, the Aussie Dollar is a favourite amongst traders for the carry trade ( particularly with the Japanese Yen), and as such the currency can be driven up by speculation, rather than economic or technical factors. The same applies to the New Zealand dollar, with both Central Banks intervening when their respective currencies has been strengthened by speculators. These interventions only seem to halt the speculation temporarily, before the upward trend continues.
Currency Trading Online : Major Economic Indicators
| Interest rates - Naturally these can cause major moves in currency. Often considered a blunt instrument, their effect in the market may last only a few hours or days. For long term traders they are an annoyance - for short term traders they represent volatility in the markets and a trading opportunity. One change in interest rates rarely happens in isolation without hints of others to follow. Currently interest rates are high, providing opportunities for the carry trade. Rates are set by the RBA at it's monthly meeting. |
| GDP - GDP is a classic lagging indicator and foremost in reporting on the health of the economy as it measures how fast or slow the economy is growing. In general a positive GDP prompts bullish moves, whilst negative comments prompt a bearish move, but these are generally well known in advance so the impact on the currency is generally muted. Figures are released quarterly. |
| CPI - Consumer Price Index. Another of the red hot indicators that is dissected by the currency and broader markets and measures the change in retail goods and services including food and energy. Unlike most other countries Australia publishes its figures on a quarterly basis with the headline figure presented as a % change on the previous quarter's figures. The effect on the currency is generally muted. |
| Trade Balance - The trade balance indicates whether the country is exporting more than it is importing, a positive trade balance, or importing more than it is exporting which is a negative trade balance. The effect of these figures on the currency is limited, simply because the figures are released almost a month after they have been calculated. It is therefore assumed that any changes will have already been felt in the economy, and is therefore largely ignored! |
OK - only two more to go - let's look at the dollar Swiss currency pair, but because we've already looked at the US Dollar, we are going to look at the secondary currency, the Swiss Franc.
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