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The currency pair AUD (Australian dollar) and USD (US dollar) has a number of features that every beginner and professional in the Forex market needs to know about.
The Austrian currency is also called "Aussie" (like the Austrian Shepherd) or "kangaroo".
This asset accounts for about 6% of all financial transactions in the market, which makes it a Forex "major". There are also more popular currency instruments involving the US dollar, but the AUD/USD pair is distinguished from them by its stability and high liquidity.
Important! Liquidity is a term that is synonymous with the word "solvency". The high liquidity of an asset means that it can be sold fairly quickly at a high price (close to or above the market price).
AUD is the main currency in this pair, while USD is a secondary or quote currency. The value of the asset rises during periods of growth in the exchange rate of the Austrian dollar or a decrease in the price of the US currency.
Accordingly, when AUD falls and USD rises, the asset loses its value. This is the basic information that every currency trader needs to get familiar with this pair.
- high volatility (the pair is characterized by fluctuations of 100 points per day or more);
- the greatest activity during the periods of two sessions: Pacific and American;
- low activity during all other trading sessions;
Important! This currency pair has a direct correlation (relationship) with gold. As a rule, an increase in the price of the yellow metal provokes a sharp jump in the value of the asset (and vice versa). Accordingly, each trader trading the AUD/USD pair needs to monitor the dynamics of the "golden rate".
There is also a correlation between NZD/USD (New Zealand and US dollars) and AUD/USD.
These pairs often move in the same direction. You can’t always rely on this parameter, since the correlation between assets is a very unpredictable and changeable thing (either it exists or it doesn’t).
In the case of the Australian and New Zealand dollars, the relationship is observed very often. Therefore, experienced traders often start “trading ahead of the curve”. In this case, beginners should follow the trading strategy of more experienced Forex users.
Should newbies trade?
Each trader at the beginning of his journey suffers with the choice of a currency pair. Many eventually settle on the euro / dollar, although this asset cannot be called the most profitable, it is rather the most popular among traders. AUD/USD is the best choice for beginners.
This is said by both experienced traders and ordinary financiers who make forecasts for exchange rates.
So, the advantages of AUD/USD over other assets:
1. Predictability. At this point, it is worth focusing. This currency pair is predictable, since Australia has a stable economic system and a special geographical position.
This country is not characterized by a depreciation of the currency. In addition, the AUD/USD pair is influenced by specific factors, each of which can be independently controlled. This gives the novice trader a big advantage;
2. Possibility of long-term investment. With this currency pair, you can enter into large transactions, as well as "keep" it as the main asset. Any speculation with AUD/USD lasts for a short period of time, as the pair quickly settles into a calm position. Therefore, it is optimal for serious currency traders;
3. Big income. Trading the Australian and American dollars promises a profit to the trader. Of course, in order to make money, you need to have a certain strategy and be aware of the latest microeconomic events.
But such things are needed for trading any asset, so in Forex they are mandatory, regardless of the chosen currency pair.
The fact is that AUD/USD can jump by 50-150 points, which will give the trader an advantage and allow the asset to be sold profitably. At the same time, such jumps are predictable.
Important! The Austrian Central Bank has a high interest rate. It has not undergone significant changes for 10 years. As you know, the interest rate of the main bank of a particular country is strongly reflected in the currency. The higher the rate, the more expensive the monetary asset.
A beginner in the Forex market should definitely try trading AUD/USD. This promises high profits with relatively calm and measured trading.
This currency instrument is also popular with professional traders who are looking for serious transactions and large investments.
What parameters affect AUD/USD?
In addition to the aforementioned gold rate, the interest rate of the Central Bank and the movement of NZD / USD, there are several more parameters by which you can determine the “state” of a currency pair in a specific time period.
Firstly, you need to monitor the price of futures for assets such as iron ore and copper. These fossils occupy a significant share of exports.
Futures is a kind of financial. a tool that allows you to carry out urgent exchange transactions for a particular asset.
The sale of futures is most active during the Asian session. A decline in futures prices means a fall in the AUD/USD pair.
Secondly, it is necessary to track not only economic events in Australia and the United States, but also various news about natural disasters. Occurring tragedies always have a negative impact on the value of the currency.
Various cataclysms "injure" the agricultural sector, which is of great importance for the Austrian economy.
Thirdly, you need to watch inflation (the market price of goods and services). When prices rise, currency jumps should also be expected. Currency interventions are no less important for the AUD/USD pair.
This is when the Central Bank has a one-time effect on the exchange rate and the market as a whole. Prerequisites for foreign exchange intervention can be tracked on the economic calendar.
When is the best time to start trading?
The most favorable time for trading AUD / USD is the period from the beginning of the London session and 2-3 hours from the American one. At this time, all profitable transactions are made, and then there is a gradual decline in activity. At the same time, the movement of AUD/USD is more even than the euro/dollar.
For trading, you can use basic strategies. It is not necessary to “reinvent the wheel” and spend hours thinking through the nuances of the technical process. You can focus on the rate of the Australian currency, which at this stage is in “free float” and depends both on the mining sector and on microeconomic events (in particular, global ones).
Important! The Australian dollar is gradually "rolling down" - everyone notices this, from financiers to traders. No negative changes are expected in the near future, but in general it is worth being on the alert.
Let's summarize. AUD/USD is a currency instrument that is easy to handle even for beginners. Differs in predictability and regularity. It largely depends on the cost of gold (but do not forget that the price of the yellow metal and the currency is affected by different indicators).
The Austrian dollar itself is a stable currency. During AUD/USD day trading, you should pay attention to longer positions.