One of the most popular currencies traded on the AvaTrade platforms is the Australian Dollar, fondly referred to as “The Aussie.” Behind its popularity are three factors: the lack of government intervention afforded the foreign exchange market; Australia’s economic and political stability; and Australia’s relatively high interest rates.
Australia is a resource-rich economy and has been doing a significant amount of trade with China. Over the past year, many feared that the Australian economy would be negatively affected by the slowdown in the Chinese economy. However, economic indicators suggest the Australian economy is doing just fine.
Today (Tuesday), Australia’s Reserve Bank Governor Glenn Stevens presided over his last monetary policy meeting as the central bank’s boss. Data released on Tuesday showed the country’s current account deficit coming in below expectations.
As expected, the RBA kept its benchmark interest rate steady at its record low, 1.5 per cent. In August, the rate was cut from 1.75. After the announcement the AUD/USD pair traded at 76.50, the highest since August 23rd.
Australia’s 2nd quarter GDP figures will be released on Wednesday at 1:30 GMT. During the 1st quarter, GDP beat expectations, growing at a 1.1% rate. GDP growth in the second quarter is assumed to have grown by about half that amount. Over the course of the year, there have been several surprises in economic figures released; tomorrow’s numbers may fit this pattern.
In any event, the Australian economy is surely showing remarkable resilience.
One significant factor that may negatively impact the Australian dollar is a US rate increase, possibly to be announced at the FOMC meetings either in September, November, or December. Despite the contrast of having seen the Reserve Bank of Australia lower its benchmark rates twice in the recent past, the AUD/USD rate, like the JPY/USD rate, seems to have a mind of its own.
Before trading any Australian dollar pair, refer to the Trading Conditions and Charges on the AvaTrade website, and call your AvaTrade professional if you have any questions.
Because of the unpredictability, and the possibility of a knee-jerk reaction either higher or lower after Wednesday’s economic data is released, it is advisable that AvaTrade customers add extra funds to their accounts this week.