Technical Analysis AUD USD

Trade Forex CFDs with Plus500

Trade the most popular forex pairs like EUR/USD, GBP/USD and EUR/GBP at Plus500. Use our advanced trading tools to protect your profits and limit losses. Trade forex with up to 1:30 leverage. With as little as 100$ you can gain the effect of 3 000$ capital! Use our trading tools such as Stop Loss, Stop Limit and Guaranteed Stop to limit losses and lock in profits. Get FREE real-time forex quotes and set indicators to easily analyse charts.

What is Forex and how does Forex trading work?

Forex trading (also commonly known as Foreign Exchange, currency or FX trading) is a global market for trading one country’s currency in exchange for another country's currency. It serves as the backbone of international trade and investment: imports and exports of goods and services; financial transactions by governments, economic institutions or individuals; global tourism and travel – all these require the use of capital in the form of swapping one currency for a certain amount of another currency.

When trading Forex CFDs, you are essentially speculating on the price changes in their exchange rate. For example, in the EUR/USD pair the value of one Euro (EUR) is determined in comparison to the US dollar (USD), and in the GBP/JPY pair the value of one British pound sterling (GBP) is quoted against the Japanese yen (JPY).

If you think the exchange rate will rise you can open a ‘Buy’ position. Conversely, if you think the exchange rate will fall you can open a ‘Sell’ position.

To see a full list of currency pairs offered by Plus500, click here.

How do you start trading Forex CFDs?

To start trading commodities with Plus500, simply:

1. Sign up / Log in to your account.
2. Search for the instrument you want to trade.
3. Click the 'Buy' or 'Sell' button depending on the direction you think the commodity will move.
4. Open a trade.

AUD/USD (Australian Dollar / U.S. Dollar)

AUD/USD (sometimes written AUDUSD) is the abbreviation for the Australian dollar and U.S. dollar currency pair or cross. A currency pair tells the reader how much of one currency is needed to purchase one unit of another currency. In this case the Australian Dollar (abbreviated AUD) is considered the base currency and the U.S. Dollar (abbreviated USD) is considered the quote currency, or the denomination in which the price quote is given.

The AUD/USD abbreviation designates a rate-price quote for which U.S. Dollars can be exchanged for Australian Dollars. The value of the AUD/USD pair is quoted as 1 Australian dollar per quoted number of U.S. dollars. For example, if the pair is trading at 0.75 it means that it takes 0.75 U.S. dollars to buy 1 Australian dollar.

Trading the AUD/USD currency pair is also known as trading the "Aussie." So in conversation you might hear a trader say, "we bought the Aussie at 7495 and it rose 105 pips to 7600."

The AUD/USD is affected by factors that influence the value of the Australian dollar and/or the U.S. dollar in relation to each other and other currencies. This includes geographical factors such as the production of commodities (coal, iron ore, copper) in Australia, political factors such as the business environment in China (a major customer for Australian commodities), and interest rate influences.

The interest rate differential between the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed) will affect the value of these currencies when compared to each other. When the Fed intervenes in open market activities to make the U.S. dollar weaker, for example, the value of the AUD/USD pair could increase. This happens because the Fed's actions move more U.S, dollars into bank circulation, thus increasing the supply of U.S. dollars, and placing downward pressure on the price of the currency. Assuming no other changes, the Australian dollar will hold its value and the relative value of the pair increases due to a strengthening of the Australian dollar when compared to the U.S. dollar.

Since Australia is the largest coal and iron ore exporter, the movement of its currency is heavily dependent on commodity prices. During the commodity slump of 2015, oil prices hit decade lows and both iron ore and coal prices slumped. Unsurprisingly the Australian dollar weakened sharply. It fell by more than 15 percent against the U.S. dollar and nearly hit parity against the New Zealand dollar - a level not seen since the 1970s.

The AUD/USD tends to have a negative correlation with the USD/CAD, USD/CHF and USD/JPY pairs because the AUD/USD is quoted in U.S. dollars, while the others are not. The correlation with USD/CAD could also be due to the positive correlation between the Canadian and Australian economies (both resource dependent).

The AUD/USD is the fourth most traded currency but is not one of the six currencies that make up the U.S. dollar index (USDX).