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Australian Dollar Trends Push Upward

August 23, 2017 by Richard Cox in Business with 0 Comments


Market trends in the currencies space have been largely looked this year as stock valuations have received most of the attention from investors.  This has been the case in Australia as well, with the ASX scaling new long-term highs that have not been seen since 2015.

This has come as a result of broad optimism in the equities space and strong metals demand in emerging markets.  The Australian economy tends to be heavily dependant on the metals exports that are in demand in emerging economies (particularly, in India and China) and this has been reflected in the equities space.

Interesting trends are developing in the realm of forex, as well.  When viewing the Australian currency in terms of its value relative to the US Dollar, commonly-watched pairs like AUD/USD can be traded using a market trading platform can be accessed easily.  Currently, we are seeing strong moves to the topside in this currency pair, and we have just broken critical resistance levels near the 0.7850 area.

Psychological Price Levels

Any time we are trading in instruments like the AUD/USD in forex or in the ASX in stock markets, it is a good idea to have an understanding of the upcoming psychological price levels that could start to influence trading activity for investors.  When we are looking at the most likely scenarios to unfold from here, the bullish activity in the AUD/USD could very easily lead to a test of the next psychological levels at 0.80.

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Over the last few years, the Aussie pair has had some difficulty moving through these levels, so it is clear that markets will probably take notice if traders are able to drive these valuations further to the topside.

If we do start to see some reversals in this commonly-watched currency pair, it is more than likely that traders will initially target the 0.75 handle as this would mark the outer parameters of the broader trading range that is seen in the forex pair.

External Forex Pairs

Of course, there are many ways of tracking the value of the Australian currency and they do not always include the valuations seen in the US Dollar.  If you are interested in using your trading platform to enact carry trading strategies, one popular option is to look at the Australian Dollar versus the Japanese Yen.  This is expressed through the AUD/JPY forex pair, which is an asset that is typically characterized by significant interest rate differentials.

Another key forex pair is the AUD/NZD, which is often thought of by traders as a means for expressing a market view on the Oceanic region.  If you are establishing a position here using your trading platform, it is important to understand that the AUD/NZD is often characterized by wide trading spreads (which mark the difference between the Bid and Ask prices that are available to traders.  These are all factors to consider whenever you are trading the Australian Dollar in live markets.

 

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