The AUD/USD pair is an excellent currency to trade with especially in the binary options. China’s economy and commodity markets are the factors that determine the market price movements of the currency pair. The reason for the claim is that China’s economy is the second-largest in the globe. Besides approximately a third of Australian exports are destined to China.
Australia produces most of the iron, gold, coal and other related commodities. Therefore, any change in the economy has an impact on the Australian dollar. People should be aware of certain things while trading the AUD/USD currency pair. First, the currency pair is highly volatile due to its dependence on numerous data pieces. The factor determines the chosen expiration when trading.
The traders should be keen on Chinese data. The data includes monetary policies, PMI, GPS, and inflation. Besides, the traders are required to monitor the choices of the Central Banks of both the United States and Australia. The meetings are made after every six months by the Federal Reserve in the United States. On the other hand, the Reserve Bank of Australia has meetings each month.
The traders should also monitor the prices of the commodities and the Chinese economy. The two named factors are essential since they have a direct impact on the Australian economy. The Australian economy also has a great effect on the Australian dollar, a situation that impacts the AUD/USD currency pair.
The other factor to consider is the Purchasing Manager Index (PMI). The PMI is released for each sector in three parts. The sectors are services, construction, and manufacturing. For instance, when the PMI release is over the level of fifty, then the case is an indication of the increase in the specific sector. On the other hand, a PMI release less than fifty suggests a recession in the specific sector.
The intervention of the Central Bank on matters related to the Australian dollar is essential to be considered. The example is the new dovish statement established by the Governor of the Central Bank. The statement is regarding the Australian dollar and offers the best target values. Majority of the financial markets are utilizing the named values as the guarantee.
There are essential economic releases to watch in the United States. For instance, the biggest economy in the world is found in the U.S. Therefore, any economic news releases from the country are of great importance. The Central Bank of the United States acts as the Federal Reserve and has a dual mandate. Due to the reason, the news regarding jobs that are either CPI and Non-Farm Payrolls are vital to the traders.
There exist other important economic news releases that possess key effects on the economy of the United States. The examples are the Producer Price Index (PPI), GPS, ADP, and Institute for Supply Management that is both Non-Manufacturing and Manufacturing. The information is made available on a quarterly basis and retail sales.
When the inflation and Consumer Price Index (CPI) is being released, the traders need to be ready for a fast-moving market. The claim is due to the fact that the economic release force Central Bank to act quickly on the interest rates. Besides, there is a highly volatile market when the Reserve Bank of Australia s making decisions regarding the interest rates.
Best Time to Trade AUD/USD
The high volume and large daily moves are evident during the Australian working hours and on the active United States trading hours. Therefore, for the highest volatility, one should pay attention to day-trading between 00:00 and 02:00 GMT. The other ideal time to trade the currency pair is between 06:00 and 08:00 GMT. On the other hand, for most trade activity and volume, the appropriate time is between 12:00 and 17:00 GMT.
In summary, the AUD/USD is a great currency pair to day trade. The currency provides good profit besides rich volatility and liquidity. The Australian dollar is one of the seven major pairs. Due to the reason, the trader should have the knowledge of both the interest rates and monetary policy set by the RBC and Fed.