AUD/USD
AUD/USD is the forex ticker for the exchange rate between the Australian Dollar and US Dollar – the pair is also known as the Aussie. It tells traders how many US$ are needed to buy one AU$ in real time.
The Aussie is the sixth-most-traded currency pair in the world – representing approximately 5% of all forex trades by volume. Thanks to its popularity, AUD/USD is reasonably volatile, which creates a range of opportunities for traders.
Trade volumes for AUD/USD increased following the Australian commodity boom in 2000. As the US became a much more involved trade partner, the relationship between the two countries increased interest in the exchange rate of their currencies. Many traders also use the AUD/USD pair as a benchmark for the relationship that the USD has with commodities and the Asian market as a whole.
The interest rate differential between the two countries has also always been a draw for carry traders – as the RBA keeps interest rates high, while the Fed has typically kept interest rates down.
AUD/JPY
AUD/JPY is the forex ticker representing the Australian Dollar against the Japanese Yen. It’s an extremely popular pairing for its relation to risk – it tends to fall in price when risk is perceived to be low and rise when risk is higher and market participants are looking for risk-off investments.
Australia and Japan have an extremely close trade relationship. Japan is the second largest importer of Australian shipments, worth approximately $19 billion in 2020 – totalling 9% of Australia’s exports. As with most AUD pairings, AUD/JPY is highly correlated with commodity price changes as Japan relies on Australia so much for natural resources.
The AUD/JPY pair is extremely susceptible to changes in the US economy due to the strong relationship between the Japanese Yen and US Dollar.
GBP/AUD
GBP/AUD is the currency pair for British Pound Sterling against the Australian Dollar. It tells traders how many AU$ are needed to buy one unit of sterling.
While Britain and Australia are always seen as somewhat connected – due to the Commonwealth – the two economies are extremely different. Sterling is a much bigger currency than the Aussie Dollar, and much more widely traded, which means GBP is more susceptible to speculation.
When trading GBP/AUD, it’s important to be aware that interest rates play a huge role in the exchange rate. This is largely because the 2008 financial crisis led to years of low interest rates for the UK, while Australia was relatively unaffected. So, GBP/AUD is a popular carry trade, which can cause volatility in the parings price.