The AUD/USD is a major currency pairing. It is not a cross currency because the USD is involved. When the pairing nomenclature was set up the USD was the weaker currency to the AUD. It is why the AUD is in the base currency position instead of the quote. It puts forex rates in USD denominations instead of Australian dollars. This can be confusing when you first learn forex, but just remember that the quote currency is always the one with the rate changes. The base will remain as 1.0000. Studying charts and news regarding a currency pair opens up the information you need to trade on. It is better to look at both fundamental and technical data to get an understanding of how the pair is trading and will trade.
Forex Rates: The Partial Impact of News on AUD/USD
You could say that the news is going to have a partial impact on a currency pair. Certainly the news plays a large role, but you also have technical traders who look mostly at the charts. More technical traders involved on a given day can swing the trend in a different direction than the news might show. When you check forex rates based on news it can also be slightly confusing due to the words being used. For instance:
· AUD lower against…
· Falling AUD to boost exports…
· AUD lowers after US/Australia job data
If you have forex rates on the brain you might interpret this as the AUD rates are lowering, but it is not the case. Actually, all of these headlines are talking about strength or value of a currency to another. In this case the information is in regards to the USD. The AUD in the first part of July 2013 was losing value against the dollar. A couple of things can be gleaned from this. The first is that the AUD becoming weaker is a good sign for Australia as it helps with increasing exports. More exports means better trade flow and thus a better currency value in the end.
The next thing that is for certain is the USD is gaining against the AUD because of the news reports. The news is very positive for the U.S. on a wide range of economic topics. For forex rates this means the USD is going to continue to lower because a lower rate means a gain in value. If it takes .90 cents in USD to make 1.0000 AUD it takes less USD to make an AUD. Conversely it takes more AUD to make 1.0000 in USD. Point is, in the AUD/USD when the chart is decreasing in rates the USD is gaining in value and the AUD is losing.
Forex Rates for AUD/USD in a Month Span
In the last month, the USD has claimed a gain in strength by running from .96 cents to under .91 cents. This is good news for forex rates in terms of making money on the USD gain and the AUD loss. You would short the AUD and go long on the USD.
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