Live AUD/USD Chart
AUD/USD is classified as one of the majors and is known as a commodity currency because of its resource-driven economy.
The AUD/USD currency pair is often referred to as Aussie or Ozzie. The nickname is short for Australian and is commonly used to refer to Australian citizens as well. The nickname is used among cross rates also. As an example, EUR/AUD is commonly referred to as Euro Aussie. A less common nickname for the currency is Matie.
Because Australia is rich in natural resources, and its economy relies on the export of such products, the currency pair is sensitive to the underlying asset prices. Australia is known to export wheat, wool, iron ore, gold, natural gas, coal, and copper.
Correlation with these products is common, although during certain periods it will be natural for divergences to occur. Gold has had a long-standing correlation with the Aussie, and at times there is a delayed effect, the AUD/USD pair will follow as much as a few weeks after a strong fluctuation in the precious metal. The fluctuation in the precious metal will tend to take time to filter into Australian economic statistics. Copper has been known to move the currency pair, and often traders will watch critical areas in copper prices to determine a directional bias in the Aussie.
The pair tends to correlate with other commodity currencies including the New Zealand Dollar and Canadian dollar because of the similarity in their economies.
What Factors Affect AUD/USD?
Commodity currencies are driven in a distinct manner in comparison to other major currency pairs. The higher interest rate offered in Australia draws appeal for carry trades and yield seekers. During a period of risk appetite, traders position in resource-driven economies such as the Aussie, for the interest rate differential. Because it is known that traders will position in commodity currencies during such times, the pair tends to get sold aggressively on sentiment changes.
Correlations with asset prices of natural resources also have a big impact on the currency pair, when natural resources decline in price, the Australian economy suffers as the economy relies on exports. Often the Reserve Bank of Australia will try and intervene during such times by manipulating its currency. A lower exchange rate for the Aussie can somewhat compensate for lower asset prices of natural resources. Information regarding the central bank, as well as monetary policy statements and press releases, can be found at http://www.rba.gov.au/. Information regarding the US central bank can be found at the Federal Reserve website at https://www.federalreserve.gov/.
When Does AUD/USD Experience Volatility
While all majors tend to experience the highest level of volatility during the North American and European overlap, AUD/USD tends to have fairly consistent volatility in all sessions. Economic releases from Australia are released during the Asian session, which tends to be quiet for other currency pairs. The European and North American sessions drive volatility as a result of the US Dollar, risk sentiment, as well as correlations.
Who Trades the AUD/USD?
AUD/USD is popular among those looking to place trades outside of common trading sessions. The volatility in the pair in the early Asian session makes it popular among North American traders that are looking to trade outside regular business hours, as well as Asian traders. The pair is also popular among traders that look to take advantage of correlations as well as divergences in correlations, or arbitrage opportunities.