AUD/USD Brokers

The AUD/USD currency pair, also known as the 'Aussie', is one of the most traded currency pairs in the forex market, highlighting the economic relationship between the United States and Australia. The pair represents how many US dollars (the quote currency) are needed to purchase one Australian dollar (the base currency).

Both economies are regarded as highly developed and their economic health significantly influences the currency pair. The Australian dollar tends to be influenced by the country's role as a leading goods exporter, with shifts in commodities' prices having a significant impact on it. In contrast, the US economy's dominating global influence ranges from technology to military presence, affecting the USD value.

Besides domestic factors, international relations and global economic trends can also lead to fluctuations in the AUD/USD pair. Changes in risk sentiment in the wider financial markets can affect this currency pair too, due to Australia's significant export-dependence and the US dollar's status as a global reserve currency. Hence, the AUD/USD pair is often seen as a barometer for global economic health, particularly in the Asia-Pacific region and the United States.

The valuation of AUD/USD is influenced by a host of fundamental factors, including interest rates, inflation, political stability, economic growth and commodity prices.

Interest rates, established by the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed), play a crucial role in determining the value. If the RBA sets higher interest rates than the Fed, it will generally increase the value of AUD as it attracts investors looking for higher returns on their investments. Conversely, if the Fed sets higher interest rates, it may push down the value of AUD/USD.

Inflation, typically measured by the Consumer Price Index (CPI), is another important factor. Lower inflation in Australia relative to the US can boost the value of AUD, as purchasing power is preserved. On the contrary, higher inflation could depress the value of AUD.

The political stability in both countries can also impact this currency pair. Any political upheaval, changes in government or geopolitical risks can sway investor sentiment and cause fluctuations in AUD/USD.

Economic growth is another critical factor. Investors will often favor a country with strong economic growth, and this can lead to an increased value of its currency. Therefore, robust economic growth in Australia can lift the AUD, whereas economic downturns in Australia can put downward pressure on AUD/USD.

Additionally, the AUD/USD pair is often impacted by fluctuations in commodity prices, given that Australia is a significant exporter of resources such as iron ore, coal and gold. If commodity prices rise, it can increase the value of AUD as it suggests greater income from Australia's resource exports. Conversely, a fall in commodity prices may devalue the AUD against the USD.