forex blog

AUD to USD: trading tips for this forex major

AUD to USD trades are quite popular in the forex market bringing in plenty of trading volume and volatility in daily price action. The interest rate difference between the two currencies also provides an advantage for currency traders because they are liable to receive interest depending on the currency they are buying.

Since the Australian dollar is considered a commodity currency due to Australia’s economic reliance on the export of its vast natural resources, traders can make predictions on the future performance of the AUD by looking at how the commodity markets are faring.

 

How to trade AUD to USD

Being one of the most popular currency pairs on the market, the AUD/USD pair offers several benefits to traders including deeper liquidity and lower trading costs.

The most favorable time to trade this currency pair is when there is increased activity in the market, and this usually happens during the hours between 08:00 a.m. and 10 a.m. (GMT +2). However, traders can also find some opportunities between 02:00 p.m. and 07:00 p.m. (GMT +2).

The AUD/USD pair is quite volatile and is involved in nearly 6-7% of the total trading volume in the forex market because of the big moves and profit potential it provides.

Through currency trading, you can buy or sell this pair and yield substantial profit regardless if the exchange rate is going up or down. This is possible because trading a currency pair enables you to simultaneously buy one currency and sell the other. If you buy when the exchange rate between them is at a low price and close the position when it reaches a peak, you will make a profit.

In short, when you open a buy position in AUD/USD pair, you are borrowing USD (U.S dollars) in order to buy AUD (Australian dollars). If you want to make a profit in this trade, the exchange rate needs to increase somewhat from the point you enter the trade.

On the other hand, taking a short position puts you on the other side of the trade and this time you would be borrowing the AUD to buy USD. If the exchange rate drops, it means that the AUD weakened compared to the USD and now your USD holds more value and can buy more AUD.

 

What drives movements in AUD/USD

The most important economic data and events that traders need to watch out for when trading this popular currency pair are interest rates and their differences, the performance of commodity markets, and GDP and unemployment data.

Australia’s export driven economy and its close trade relations with China have shielded the AUD from economic downfall and continued optimism in commodity markets is supporting the Australian dollar’s sustained growth.

 

How to get started

If you want to take advantage of the AUD to USD exchange rate movements, you only need to sign up for an account with CM Trading.

Basic trading accounts can be activated with a deposit of $250 and each client is assigned with a personal trading specialist who can provide advice and guidance on all the latest market developments and help you achieve your trading goals with a trading plan that aligns with your risk profile and profit targets.

Open an account now to get access to thousands of financial assets including currency pairs, stocks, commodities, indices and cryptocurrencies.

Register here to get started!

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