The AUD/USD forex pair is a popular currency pair among forex traders that measures the exchange rate between the Australian dollar (AUD) and the US dollar (USD). It represents around 5% of the entire forex market by volume and is informally known as the “Aussie”. This major currency pair is heavily influenced by various economic and political factors, such as interest rate differentials, GDP growth rates, commodity prices, and geopolitical events.
The AUD/USD forex pair tends to have a higher beta, making it more sensitive to changes in equity and commodity prices compared to other currency pairs. Therefore, day traders can often witness high levels of both volume and volatility in the AUD/USD forex pair.
Trading AUD/USD with CFDs can offer several benefits, such as leverage and the ability to trade both long and short positions. However, it's important to keep in mind that CFDs are complex instruments and come with a high risk of losing money quickly due to leverage. Therefore, it's essential to have a solid trading plan and risk management strategy in place.
AUD/USD trading via contracts for difference (CFDs) is one of the investment options offered by XTB.
When investing in the AUD/USD forex pair, it is important to consider the interest rate differential between the two countries. The Reserve Bank of Australia (RBA) typically sets higher interest rates compared to the US Federal Reserve, which can lead to a carry trade strategy where traders borrow in USD to invest in AUD to gain from the interest rate differential. However, this strategy can also expose traders to significant risks.
In summary, investing in the AUD/USD forex pair requires a good understanding of the economic and political factors that influence the exchange rate between the two currencies. Traders also need to keep a close eye on the prices of gold and copper, as they have a high positive correlation with AUD/USD.