Factors That Affect the Price of the Australian Dollar


The Australian Dollar (AUDUSD) is an international currency. It is a cross-priced currency, which means that the price of the AUDUSD is affected by the prices of other currencies. This can make it a tricky currency to trade, as the price fluctuates constantly. Therefore, you need to consider the factors that affect the price of the AUDUSD when making your trades. These factors include economic indicators, the Shanghai stock exchange and commodity prices.

Commodity price crashes

When commodity prices start to crash, the Australian Dollar (AUD) usually follows. That’s because the AUD is a commodity currency. It sells a lot of commodities and is often seen as a proxy for the health of the global economy. But while AUD/USD has shown some resilience to recent price fluctuations, it’s not without its challenges.

Commodity prices remain relatively buoyant, but they’re still about 10-20 percent lower than the all-time highs they hit a couple of years ago. This is causing concerns about the sustainability of the growth rates in most developed economies.

While the AUD/USD has rallied a bit recently, it remains below its long-term averages. The exchange rate has been stuck in a tight range between 0.8300 and 0.6500 for most of the past few years.

Economic indicators

Australian dollar is one of the most popular currencies for traders. It is popular for its geography, government policy, and exposure to Asia. However, this currency is also impacted by a wide range of economic indicators.

Australia has a strong economy, but the country is also facing a current account deficit. This means that Australia is exporting a lot of goods but not importing enough. So, a positive trade balance would help the AUD. The Australian economy is heavily dependent on commodities.

Commodity prices can have a direct impact on the AUD/USD pair. This can make the currency more attractive or less attractive depending on the prevailing commodity price levels. During periods of high price, the Aussie is usually good to buy. But when the demand for commodities wane, the currency can depreciate.

Correlation with the Shanghai stock exchange

In the past, the correlation between the Shanghai and the S&P 500 has been quite high. However, recent events have led to worries among investors.

Among other things, the S&P500 has dropped by almost eight percent in the first two weeks of the year. Meanwhile, the Shanghai stock exchange is also experiencing volatility. At the same time, the SSE Composite Index is up by nearly 33 percent in the last year.

One of the biggest concerns is that Chinese regulators have thrown a wrench into the valuation process. They’ve taken significant measures to control market volatility, including banning large individual shareholders from selling and limiting short sales.

Despite the fact that the S&P500 has been falling since early January, there’s been a modest rebound by the end of January. But it’s still a small victory compared to the massive losses experienced earlier this year.

AUDUSD is a cross-priced currency

The AUD/USD currency pair is the fifth most traded currency worldwide. It has risen since the GFC, largely due to favourable terms of trade. But the Australian economy faces challenges.

The Reserve Bank of Australia (RBA) is trying to keep inflation down and fears of recession at bay. It recently raised the cash rate target by 25 basis points. In addition to monetary policy, a variety of factors affect the value of the Australian dollar.

One factor is the interest rate differential between the US and Australia. Since other advanced economies have experienced weak economic growth, their interest rates are low. This creates downward pressure on the U.S. Dollar.

Another factor that drives the value of the AUD is the commodities market. Australia’s resource-driven economy is largely dependent on commodity prices. When commodity prices rise, it increases demand for the AUD. However, if prices fall, it can decrease the value of the AUD.

AUDUSD trading best time of day

The best time of day to trade the AUDUSD can make a big difference to your profits. The Australian dollar is one of the most actively traded currencies in the world, and it offers plenty of volume and volatility.

Several different approaches can be used to day trade the AUDUSD. Some traders use the traditional method of using historical price charts, while others choose to utilise sophisticated live streaming charts, such as 1-minute charts.

The most active trading period for AUD/USD takes place from 1300 to 1700 GMT. This is a highly liquid time of the day, as most of the Asia-Pacific markets are open, including Japan, Singapore, and Hong Kong.

It is also common for traders to trade during an overlap period, when these markets are open simultaneously. These markets have high liquidity and are easy to trade.