Type: Currency | Group: Majors | Base: Australian Dollar | Quote: US Dollar | Spread: 0.08 – 3.8 pips
The Australian dollar U.S. dollar (AUD USD) is a currency pairing whereby the Australian dollar and the U.S. dollar can be traded against each other. The AUD USD can be thought of as the Aussie dollar versus the American dollar – when you short one, you are long the other and vice versa. The AUD USD is usually numbered among the ten most widely traded currency pairs. The AUD USD may also be written as AUD/USD.
Much like the USD CAD, the AUD USD is often used as a commodity play. Australia has a robust mining sector and significant mineral resources that the country is developing. The U.S. also has mineral resources, but its economy is less resource focussed than Australia. The Reserve Bank of Australia is charged with watching over the AUD, just as the Federal Reserve watches over the USD.
About Australian Dollar
The Australian dollar is the official currency of Australia. The Australian dollar is considered to be one of the major currencies and is paired with all the other major currencies, including the U.S. dollar (USD), Japanese yen (JPY), Swiss franc (CHF), euro (EUR), pound sterling (GBP) and Canadian dollar (CAD).
The Australian dollar is a very stable currency with a history that is refreshingly free off large scale government interventions into the currency market. The AUD is considered to be one of the commodity currencies because a large percentage of Australia’s economy is based off of the nation’s vast mineral deposits and mining activities.
About US Dollar
The USD is integral to world trade in that it belongs to the world’s largest economy and acts as the world reserve currency. Because of this unique situation, many of the standard economic rules do not seem to apply to the USD.
The U.S. government has had long periods of fiscal irresponsibility and yet the USD has not always suffered during inflationary times that would damage any other currency. This is because, as the world’s largest economy, the USD is considered a safe haven currency in times of global uncertainty. However, this rule doesn’t always hold, and the U.S. dollar does eventually pay for periods of prolonged inflation and trade deficits – it just seems to enjoy a much longer lag before any market reaction takes place.
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