AUDUSD Currency Pair is a currency pair which represents the Australian Dollar against the US dollar. AUDUSD stands for the currency pair referred to as ‘major’ and is one of the major currency pairs traded on the international Forex market.
Also known as the ‘major’ currency pair, this means that it features the US dollar, which is traded in great volumes, is heavily traded, has medium liquidity and offers very low spreads than other major currency pairs. On the other hand, this makes AUDUSD a high risk currency. It also means that you should never get carried away with its high volatility and take profit slowly, as you might lose your shirt and lose your life savings.
The AUDUSD has four main factors that affect it, namely, the state of the Australian economy, the interest rates of US Federal Reserve, the political situation of the US and other external factors. It is true that these factors are all interrelated in some way, but it is not clear at the time of analysis how they influence each other.
A recession in Australia means a decline in demand for Australian Dollar. With the declining demand, a stronger USD-Australian dollar will lead to higher prices of AUD. And if the US Federal Reserve keeps on raising interest rates, this will make AUDUSD even more expensive. This makes AUDUSD a high risk currency.
On the other hand, there is an economy in Australia which is always booming, and the demand for AUD in the Australian economy will always remain high. This indicates that the trade deficit of AUDUSD will always be on the rise, and that it will not fall when the US economy is booming.
In this case, AUDUSD will have a positive value and you can sell AUDUSD when the value increases. This will lead to greater profit for you.
On the other hand, there may be a financial crisis in US and this will lead to a decline in demand. When that happens, AUDUSD will lose value as well and you should sell AUDUSD immediately.
Financial crises usually occur because of the increase in the rate of inflation or because of a decline in the interest rates of interest. Even the rise in the supply of money or a decrease in the demand for money leads to a drop in the price of currencies. But, the AUDUSD cannot fall because it is a major currency pair that is exchanged on a large scale, so it cannot fall because of a change in the price.
So, it can be said that the AUDUSD is highly stable when compared to other currencies. However, you have to know the reasons why AUDUSD can fall.
If the US government decides to devalue the AUDUSD in order to keep the trade deficit in check, the global trade will be affected. As the AUDUSD loses value, there will be a big decrease in the trade deficit.
Also, it is not clear whether the political situation of the US will not also affect its value. In other words, the political stability of the US will also affect the value of AUDUSD.
If there is no strong economic and political position of US in Australia, then it will be difficult for the AUDUSD to rise or fall because the US will not intervene in the trade. Since the US is always trying to maintain a strong economic position, it will always prefer to buy or sell. to prevent a big loss in the Australian trade deficit.
Furthermore, the political situation of the US is also influenced by other countries, because there are different views about it. If the US will support the political position of another country, then the AUDUSD value will fall and vice versa.