AUD to USD trading
The AUD/USD pair, known as the ‘Aussie,’ is one of the most popular forex pairs globally, representing the Australian dollar against the United States dollar.
Australia’s economy depends heavily on the export of commodities, such as coal, iron ore and natural gas, which makes this pair highly correlated with global commodity prices.
Popularity and characteristics
AUD/USD is one of the top five traded currency pairs, making it very liquid. It’s attractive to traders due to Australia’s strong economic ties with China, a key driver of global commodity demand.
The Aussie often reacts sharply to changes in commodity prices, interest rate decisions, and economic data from both the US and Australia.
Main influences
The key drivers of AUD/USD include commodity prices, particularly those linked to Australia’s major exports, as well as economic data from China, one of Australia’s largest trading partners.
Interest rate differentials between the Reserve Bank of Australia (RBA) and the U.S. Federal Reserve also play a significant role in determining the pair’s movement.
What are the main economic news events that move the price of AUD/USD?
- RBA interest rate decisions
- Commodity prices, especially iron ore and coal, which Australia exports
- Chinese economic data, as China is a major trading partner of Australia
- U.S. Federal Reserve policies and interest rate changes
- Australian employment and inflation reports
What are the best times to trade AUD/USD?
AUD/USD is a major currency pair that offers steady trading opportunities due to its high liquidity and sensitivity to global economic trends.
To maximise your success when trading this pair, it’s essential to focus on times of high liquidity and market activity.
Overlap of major trading sessions
AUD/USD is most active during the following trading session overlaps:
- Sydney session: Active from 10.00pm to 7.00am GMT, this session aligns with Australian business hours, making it ideal for trading news impacting the Australian dollar
- New York session: Active from 1.00pm to 10.00pm GMT, this session overlaps with the Australian evening, providing opportunities for movements in the US dollar
- Asia-Pacific and London overlap: Between 6.00am and 9.00am GMT, liquidity increases as the London market opens while the Sydney and Tokyo markets are still active
Key times to trade AUD/USD
- 12.00am to 3.00am GMT: During this period, the Sydney and Tokyo forex trading sessions overlap, creating higher liquidity and price movements
- 1.00pm to 4.00pm GMT: The overlap between the New York and Sydney sessions offers another window of increased activity and trading opportunities
Global forex trading hours explained
UTC (Coordinated Universal Time) and GMT (Greenwich Mean Time) are time standards often used interchangeably in forex trading to reference trading hours, economic events, and session overlaps.
While they are very similar, there are subtle differences that traders need to understand.
Key differences
- UTC: This is a time standard based on the atomic clock. It does not observe daylight saving time (DST) and remains consistent year-round
- GMT: This is a time zone based on the earth’s rotation, based around the Prime Meridian in Greenwich, England. It is technically the same as UTC in standard time, but it differs during daylight saving hours in some regions
Differences between UTC and GMT during daylight saving time (DST)
- UTC: Always remains constant, as it is not affected by DST
- GMT: While traditionally not affected by DST, many trading platforms and countries use the term ‘GMT’ loosely to refer to time zones that do shift during daylight saving months
For example, the UK switches to British Summer Time (BST) at 1.00am GMT on the last Sunday of March, when clocks move forward one hour. Clocks are turned back one hour on the last Sunday of October
Time standards in forex trading
- UTC: This time standard is now favoured for its consistency, making it easier to track trading sessions and economic events without adjusting for seasonal changes. Most brokers and economic calendars use UTC for clarity
- GMT is still widely used, especially by UK-based forex brokers. However, confusion can arise during daylight saving months of the year, particularly when referencing times in regions that observe seasonal changes
Why time standards matter in forex trading
Trading session overlaps
Understanding UTC and GMT is crucial for identifying when trading sessions (e.g. London, New York, Tokyo) overlap. For instance:
- The London session typically runs from 8.00am to 4.00pm GMT (or 8.00am to 4.00pm UTC)
- However, during DST in the UK, the session is often referred to as 9.00am to 5.00pm BST, which can be confusing if not standardised to UTC
Economic events
Forex traders rely on economic calendars to track announcements like interest rate decisions or employment data.
These are often listed in UTC or GMT, and it’s essential to know which time standard is being used, to avoid being caught unaware or missing important events.
Broker server times
Some brokers use UTC to standardise their platform times, while others use GMT or even local times (e.g. New York time). Knowing the difference helps traders synchronise their trading habits with relevant market hours.
What factors should I consider before trading AUD/USD?
The AUD/USD currency pair is one of the most traded pairs globally due to its liquidity and connection to both the Australian and US economies. Profitable forex traders understand the factors influencing its movements.
Market volatility
- Volatility level: AUD/USD is moderately volatile compared to pairs like GBP/JPY. It often experiences larger price swings during significant economic announcements or shifts in global risk sentiment
- Risk sentiment: As a commodity-linked currency, the Australian dollar is sensitive to global risk appetite. It typically strengthens during periods of optimism and weakens during risk aversion
Trading hours
- Active sessions: AUD/USD is most active during the Sydney, Tokyo and New York trading sessions. The pair experiences higher liquidity and price movements during the overlap of these sessions, particularly between 12.00am and 3.00am GMT (Sydney/Tokyo overlap) and 1.00pm to 4.00pm GMT (New York/Sydney overlap)
Economic news and events
- Australian economy: Key drivers include RBA policy decisions, employment data, inflation reports and trade balance figures
- US economy: Watch for Federal Reserve interest rate announcements, Non-farm Payroll data, and inflation figures. US economic news significantly impacts the US dollar side of the pair
- Global commodity prices: Australia is a major exporter of commodities like iron ore and coal. Fluctuations in these prices heavily influence AUD/USD
Liquidity
- AUD/USD is a major pair, so it benefits from high liquidity. This allows for tighter spreads and lower transaction costs, making it attractive to both retail and institutional traders
Correlations
- Commodities: AUD/USD is closely correlated with commodity prices, particularly iron ore, metals and energy. Traders often monitor trends in these markets to anticipate movements in the pair
- Equity markets: The pair sometimes correlates with equity indices, especially during periods of strong global risk sentiment
Spreads and costs
- Due to its popularity and high liquidity, AUD/USD typically has tight spreads, making it cost-effective to trade compared to exotic or minor pairs
Your chosen trading strategy
- Short-term trading: If you are a day trader or scalper, focus on trading during high-liquidity sessions and times of economic news releases if you are looking for more significant price movements
- Long-term trading: For position traders, AUD/USD’s sensitivity to macroeconomic trends and commodity prices makes it suitable for strategies based on fundamental analysis
Benefits of trading AUD/USD
- Commodity exposure: The AUD/USD pair allows you to trade global commodity trends, as Australia’s economy is heavily linked to exports like iron ore and coal
- High volatility: Known for higher volatility, AUD/USD can present profitable opportunities for short-term traders, especially those focusing on commodity prices
- Diverse market hours: The pair remains active during both the Asian and US trading sessions, providing more trading opportunities throughout the global 24-hour day
Carry trade potential
The relatively higher interest rates in Australia compared to the US can make AUD/USD attractive for carry trades
Influence of Chinese economy
Australia’s economic dependence on China makes this pair a key indicator of Chinese economic performance
Strong trend patterns
AUD/USD often follows clear and strong trend patterns, making it suitable for traders using trend-following strategies
Frequently asked questions
24-hour market
Unlike other financial markets, the forex market operates 24 hours a day, five days a week, allowing you to trade at any time that suits you, regardless of your location
Trade long or short
With forex trading,you have the flexibility to profit in both rising (long) and falling (short) markets, giving you more opportunities to make profitable trades
Diverse trading opportunities
With a wide range of currency pairs to choose from, you’ll be able to find trading opportunities in most economic conditions and market types
Access to leverage
Let your trading benefit from high leverage opportunities, allowing you to control a larger position with a smaller capital investment, potentially increasing your profits
How much margin is available to trade AUD/USD with MarketMates?
Trading AUD/USD requires you to have 1% margin in your trading account when trading with MarketMates.
What does it mean to be long or short AUD/USD?
- Being long AUD/USD means you are buying Australian dollars (AUD) and selling USD dollars (USD), expecting the AUD to strengthen against the USD
- Being short AUD/USD means you are selling Australian dollars and buying US dollars, expecting the AUD to weaken
What is the meaning of base currency and quote currency?
The base currency is AUD (Australian dollar), and the quote currency is USD (US dollar).
The price of the pair shows how much USD (quote currency) is needed to buy one AUD (base currency).
Why MarketMates?
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AUD/USD Chart
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Forex Market Data
This market data list provides a broad overview of forex market performance for the major pairs, including value, change, change percent, open, high, low and previous values.
Forex Heat Map
Find out where the big movements are happening with this heat map showing you where all the action is in today’s market.
See all the movers and shakers for a birds-eye view of current forex price action.
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Forex Cross Rates
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Forex Market Screener
Get all the information you need about your favourite pairs using this handy screener tool.
See a clear view of real-time price information, including change and change percent, high and low, plus buy or sell ratings.
You can choose whether to view just the major pairs, or choose the majors, minors or exotics alone.
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Forex Market News
Keep track of what’s happening in the forex markets with this daily news summary, filtered to bring you the most important fx market news as it happens.
Use the side slider to scroll down and view more news items.
Economic Calendar
Never miss vital upcoming economic events with this useful events calendar. See all the events and announcements you need to know, with the ability to set up filters for:
- Event importance
- Affected currencies
