AUD/USD (Australian Dollar/U.S. Dollar)

What Is AUD/USD (Australian Dollar/U.S. Dollar)?

AUD/USD (once in a while written AUDUSD) is the truncation for the Australian dollar and U.S. dollar currency pair or cross. The AUD/USD is the fourth most traded currency however isn't one of the six currencies that make up the U.S. dollar index (USDX).

Figuring out the AUD/USD (Australian Dollar/U.S. Dollar) Currency Pair

A currency pair lets the reader know the amount of one currency is expected to purchase one unit of another currency. In this case, the Australian Dollar (abbreviated AUD) is viewed as the base currency, and the U.S. Dollar (abbreviated USD) is viewed as the quote currency, or the denomination where the price quote is given.

The AUD turned into a free-floating currency in 1983. Its notoriety among traders is due to different factors connected with geography, geology, and government policy. Australia is among the most extravagant countries in the world in terms of natural resources, including metals, coal, diamonds, meat, and fleece.

The AUD/USD truncation assigns a rate-price quote for which U.S. Dollars can be traded for Australian Dollars. The value of the AUD/USD pair is quoted as 1 Australian dollar for each quoted number of U.S. dollars. For instance, assuming the pair is trading at 0.75 it means that it takes 0.75 U.S. dollars to buy 1 Australian dollar.

The AUD/USD is one of the world's top-traded currency pairs. Trading the AUD/USD is likewise referred to casually as trading the "Aussie." So in discussion, you could hear a trader say, "We bought the Aussie at 7495 and it rose 105 pips to 7600."

The AUD/USD is impacted by factors that influence the value of the Australian dollar and additionally the U.S. dollar according to one another and different currencies. This incorporates geographical factors like the production of commodities (coal, iron metal, copper) in Australia, political factors like the business environment in China (a major customer for Australian commodities), and interest rate influences.

The AUD/USD will in general have a negative correlation with the USD/CAD, USD/CHF, and USD/JPY pairs in light of the fact that the AUD/USD is quoted in U.S. dollars, while the others are not. The correlation with USD/CAD could likewise be due to the positive correlation between the Canadian and Australian economies (both asset dependent).

The AUD/USD and the Australian Economy

The interest rate differential between the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed) will influence the value of these currencies when compared to one another. At the point when the Fed mediates in open market activities to make the U.S. dollar more fragile, for instance, the value of the AUD/USD pair could increase. This happens on the grounds that the Fed's activities move more U.S, dollars into bank circulation, subsequently expanding the supply of U.S. dollars, and putting lower pressure on the price of the currency.

Expecting no different changes, the Australian dollar will hold its value, and the relative value of the pair increases due to a fortifying of the Australian dollar when compared to the U.S. dollar.

Since Australia is the biggest coal and iron mineral exporter, the movement of its currency is intensely dependent on commodity prices. During the commodity slump of 2015, oil prices hit decade lows and both iron mineral and coal prices slumped. Obviously the Australian dollar debilitated forcefully. It fell by over 15% against the U.S. dollar and almost hit parity against the New Zealand dollar — a level unheard of since the 1970s.

Features

• AUD/USD is the shortening for the Australian dollar/U.S. dollar currency pair, referred to casually as the "Aussie" among forex traders.
• Since Australia depends vigorously on raw materials exports, this currency pair is intensely influenced by commodity prices.
• AUD/USD is likewise the ticker symbol for trading the spot price of this pair.