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Currency – Australian Dollar (AUD)
Australia is a member of the G7 and has a rich economy due to a large mining sector. Therefore, the Australian dollar, also known as the “Aussie”, is commodity-price sensitive since the country produces ores and metals, as well as wool and live animals.
Since Australia is the third largest gold producer, the Aussie is affected by gold prices. For example, if the price of gold rises, the AUD will rise as well.
Carry Trade
The Aussie is a good candidate for carry trades because Australia has higher interest rates than Japan who has one of the lowest rates in the world. This interest rate differential will be good for increasing your profit when trading this currency pair.
Economic Indicators to Follow
Balance of TradeWatching changes in the country’s export and import levels will have an effect on the Aussie since Australia has an extremely robust trade sector.
Gross Domestic ProductAn increase in GDP will be positive for the Aussie.
Unemployment RateWatching the unemployment rate will give an indication of future economic activity and consumer spending. If more people are out of work, they will spend less and this is negative for the economy, and consequently negative on the AUD.
China’s Economy
The Aussie is also affected by the state of China’s economy because China is an important trading partner and export market for Australia. As a result, positive data from China will be good for the Aussie.
New Zealand’s Economy
The state of the New Zealand economy also has an effect on the Aussie, though to a lesser extent. New Zealand is also a major trading partner for Australia.
