Following the US Dollar, Euro, Yen, and British Pound, the Australian Dollar, or ‘Aussie’, is the fifth-most-traded currency in the foreign exchange markets. Whether you want to trade the Australian Dollar to diversify your portfolio, or to take advantage of the high interest rates in Australia, one thing is certain: the Australian Dollar is a favorite amongst currency traders for its reliability and broad range of benefits.
Australian Dollar Contract Specifications
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Australian Dollar Facts
Australia’s notes are printed on polymer and have features that make it difficult to counterfeit. Australian dollar futures allow traders to assess value against the U.S. dollar, as well as the opportunity to address risk from currency fluctuations in other foreign trade markets.
Currency rates are determined by a one base currency quoted in relation to a different currency. Major currencies that are traded are floating. Central bank monetary policies can affect the value of currency. The Reserve Bank of Australia regulates monetary policy for its currency. For instance, low interest rates dictated as policy can be bearish for currency value because new money is being pumped into the market. This is unappealing to foreign investors because returns yield those low interest rates. In contrast, high interest rates set as policy are bullish and appealing to foreign investors because of high interest yields from the returns. Currency values can be also be affected by the nation’s current account balance. An excess or influx in the balance is considered to be bullish, while a deficit or drainage is considered to be bearish. Economic stability and investment in the country also help strengthen currency values because international investors are likely to buy into that country’s favorable markets
Source: Barchart, Reserve Bank of Australia
Last updated September 2015.
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