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Benefits & Risks Trading AUDUSD

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Benefits of trading AUDUSD
  • Liked by forex traders for its liquidity, relatively attractive spreads and link to global economic trends.
  • Often reacts swiftly to economic data and central bank policies.
  • AUDUSD is perceived as a risk-linked, or growth-linked currency.
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Risks of trading AUDUSD
  • A favorite risk proxy, the Aussie dollar has the potential to be jerked around by macro events.
  • Taunted by the ongoing trade spat between the U.S. and China.
  • Australia's currency is counter-cyclical and volatile in nature.


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What is the AUDUSD and why trade it?
  • The AUDUSD combines the US dollar and the Australian dollar and is often nicknamed the “Aussie”.
  • The AUDUSD pair has grown to be in the top five most traded pair with an estimated share of 6.9% of forex volume according to the Bank of International Settlements.
  • The Aussie can be seen as a proxy for exposure to China as well as its strong link to key commodities such as iron ore, coal and so on.
  • Historically, after the global financial crisis, the Australian dollar has had a higher yield and has been used for what is called a ‘carry trade’ due to having higher interest rates than the US dollar (however this is not the case at the time of writing).
  • As is it in the top five most traded pairs, the liquidity and bid/ask spreads are extremely competitive.
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What drives the AUDUSD?

There are many drivers of the currency, including but not limited to:

  • Economic data being released such as Australian employment or US inflation.
  • Economic data being released in China such as Chinese GDP, PPI and more.
  • The AUDUSD also tends to have a higher sensitivity to overall market sentiment (so called “risk on”). It is more sensitive to rising or falling equity markets as well as commodities such as Iron Ore, Copper and more.
  • Interest rate differentials between Australia and the US.
  • Speeches and conferences from the Reserve Bank of Australia (Australia’s Central Bank) and the US Federal Reserve.
  • Geopolitical events, especially in the Asia Pacific.
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When is the most active time to trade the AUDUSD?

The AUDUSD trading hours are typically more active between 19:00 and 04:30 (GMT).

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What are the advantages of trading the AUDUSD?
  • The AUDUSD is the fifth most active currency pair, representing close to 7% of daily turnover according to the Bank of International Settlements.
  • Due to it being a highly active pair, the bid/ask spread is incredibly competitive, meaning you can enter and exit a trade for a lower cost.
  • The Aussie is often seen as a “risk-on” currency, closely tracking global equity markets as well as the economic performance of not just Australia and the US but China too.
  • Due to Australia having a large commodity export market, iron ore, gold, coal, and copper can also impact the AUDUSD.


Based on Australian Eastern Standard Time, forex market hours are Sydney, 7:00am – 4:00pm AEST; at 9:00am the Tokyo (Japan) market comes online and before it closes, the London market comes online at 5:00pm; New York opens at 10:00pm and closes at 7:00am when the Sydney (and New Zealand) Forex market opens again.

Its popularity among traders is due to various factors related to geology, geography, and government policy. For example, if the pair is trading at 0.75 it means that it takes 0.75 U.S. dollars to buy 1 Australian dollar. The AUDUSD is one of the world's top-traded currency pairs.

You can start trading AUDUSD on MetaTrader 4 today!

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