AUDUSD AUD/USD

The AUD/USD is one of the majors that is of great demand in the currency market. It has large volumes of trading and it is technically predictable. Another name for the Australian Dollar is the Aussie. It is very popular among individual traders. The pair has its own unique features:
- It is a commodity currency, that is, it is driven by prices on commodities. Australia is rich in minerals, metals, fuels, and extensively exports to the Asian region. The country is the third largest producer of gold. So, AUD/USD is largely affected by gold prices. It also exports crude oil and petrochemicals, metal ores, precious stones, and agricultural products. An increasing demand for these items makes the Aussie exchange rate stronger, and vice versa. The Thomson Reuters/Jefferies CRB Index may indicate a possible direction of the Aussie. The more the index rises, the more AUD/USD goes up, and the more the index descends, the more the Aussie weakens;
- The Aussie is a risky asset as it is commodity-driven. The increase of risk appetite and improving market sentiment positively affect the currency exchange rate. Rising business activity, rising GDP in developed nations, monetary easing by major central banks, lower borrowing rates, and geopolitical risks strengthen the Aussie. The CBOE Volatility Index (VIX) has a significant correlation with the Aussie. The lower the index, the stronger the AUD/USD;
- The Australian economy is heavily linked to China as it is its major trading partner. Australia has 25% of its exports send to China, so the country is extensively exposed to China’s economic perspectives. Rising economic activity in China increases Australian exports, and eventually strengthening the Aussie. So, the currency is very sensitive to China’s GDP, production, foreign trade, and political issues;
- Australia has a positive trade balance. So, a weaker Aussie makes exports more profitable. Thus, the Reserve Bank of Australia (RBA) is trying to keep its interest rates lower than the Federal Reserve (Fed). The downside trend for the AUD/USD has been prevailing over recent years;
- The U.S. Dollar is dominating in this pair. So, the Greenback has a stronger effect on the pair. Thus, dollar-related drivers should be monitored very carefully;
- The Aussie, like Asian currencies, is most actively traded during night-time in Europe. Economic data that is related to the Aussie is also released during night time. So, alleviated volatility is likely to emerge during that time in case of a market-moving event.