The Australian dollar is the fifth most traded currency in the world, accounting for 7.6% of the world's daily share and trading in the world foreign exchange markets behind the US dollar, the euro, the yen and the pound sterling. It is also a reserve currency.
The Australian dollar, generally referred to by foreign-exchange traders as the "Aussie", is popular with currency traders because of the comparatively high interest rates in Australia, the relative freedom of the foreign exchange market from government intervention there and the general stability of Australia's economy and political system. Adding to its attractiveness is the prevailing view that the Australian dollar offers diversification in a portfolio containing the major world currencies because of its greater exposure to Asian economies and the commodities cycle.
The chart of exchange rate is interesting to watch because it tends to correlate negatively to other major currency pairs, including USD/CAD, USD/JPY and USD/CHF. The pair is largely affected by interest rate differentials between the countries and by banking announcements.
Some economists theorize that commodity prices are the dominant driver of the Australian dollar, and this means changes in exchange rates of the Australian dollar occur in ways opposite to many other currencies. In fact, Australia's balance of trade continues to depend primarily upon commodity exports such as minerals and agricultural products. This indicates that the relative value of the dollar will vary significantly during the business cycle, showing a rally during global booms when Australia exports large amounts of raw materials, and falling when mineral prices plummet or when domestic spending dominates the export earnings outlook. This movement is in the opposite direction to other reserve currencies, which are usually stronger during market declines when traders move their money from falling stocks into cash.
AUD/USD is a popular currency pair because it can be traded actively during both the Asian and New York trading sessions. When reviewing Australian dollar to the US dollar FX trading analysis one should chart technical trends in order to see patterns that can elucidate future profits. Analysis from the DailyForex.com trading team can provide you with the insights you need to trade successfully.