Together with the New Zealand Dollar and the Canadian Dollar, the AUD is a commodity currency , that is a currency whose country's exports are largely comprised of raw materials precious metals, oil, agriculture, etc.
The interest rates set by the Reserve Bank of Australia RBA have been among the highest of industrialized countries and the relatively high liquidity of the AUD has made it an attractive tool for carry traders looking for a currency with the highest yields. These factors made the AUD very popular among currency traders. Australia is a big exporter to China and its economy and currency reflect any change in the situation in that country.
The prevailing view is that the Australian Dollar offers diversification benefits in a portfolio containing the major world currencies because of its greater exposure to Asian economies. This correlation with the Shanghai stock exchange is to be added to the correlation it has with gold.
In the financial world, gold is viewed as a safe haven against inflation and it is one of the most traded commodities. Australia's dependency on commodity mineral and farm exports has seen the Australian Dollar rally during global expansion periods and fall when mineral prices slumped, as commodities now account for most of its total exports. The AUD is under a free floating regime since Before that it was pegged to a group of currencies called the trade weighted index TWI.
Reserve Bank of Australia RBA that issues statements and decides on the interest rates of the country. Its president is Philip Lowe. Australian Government headed by Malcolm Turnbul and its Department of Finance whose minister is Mathias Cormann that implement policies that affect the economy of the country.
The Fed controls the monetary policy, through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis. GDP Gross Domestic Product , the total market value of all final goods and services produced in a country. It is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing.
Generally speaking, a high reading or a better than expected number is seen as positive for the AUD, while a low reading is negative. Current Trade Balance , a balance between exports and imports of total goods and services.
A positive value shows trade surplus, while a negative value shows trade deficit. If a steady demand in exchange for AUD exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.
Gold, as explained above, but also Iron Ore and Natural Gas. This group also includes the following currency pairs: Your assets have been added. Add pairs to list.More...