What is the Australian Dollar (AUD)?

What is the AUD?

The Australian Dollar (AUD) is a commodity-linked currency influenced by export demand, Reserve Bank of Australia policy, and global risk sentiment. Traders watch AUD crosses—especially AUD/USD and AUD/JPY—to express views on growth, Chinese demand, and carry trades.

Macro Drivers

• Commodity exports: Iron ore, coal, and LNG revenue create a tight link between AUD and global industrial activity.
• China dependency: China is Australia’s largest trading partner; Chinese PMI and stimulus headlines move AUD pairs.
• Interest-rate differentials: The RBA’s cash rate determines carry appeal versus the USD or JPY.
• Risk appetite: AUD tends to strengthen in risk-on environments and weaken during safe-haven flows.

Trading the Aussie

• Monitor data: Watch Australian CPI, employment, and commodity price indexes.
• Follow the RBA: Minutes and speeches guide rate expectations.
• Combine tech and macro: Use chart patterns to time trades aligned with fundamental bias.
• Hedge exposure: Corporations use AUD hedges to manage export revenue swings.

Deep Dive

Most edges come from applying clear rules consistently. Expand your analysis beyond a single signal: add context from higher timeframes, recent volatility, session behavior, and catalysts. Define invalidation so a trade becomes obviously wrong fast, keeping losses small while letting winners compound.

Trader Checklist

• Higher‑timeframe bias aligns with the setup.
• Clear level or zone for entry with confluence.
• Pre‑defined stop beyond structure; 2–3R target.
• Session/liquidity supports follow‑through.
• No imminent high‑impact news unless planned.

Strategy Ideas

• Combine structure with momentum confirmation (break/close/acceptance).
• Use partials: scale out at first target; trail remainder.
• Journal results by session and pair to refine timing.

Risks and Limitations

• Thin liquidity widens spreads and distorts signals.
• False breaks around obvious levels—wait for acceptance.
• Overfitting indicators; keep the process simple and robust.

Example

Map bias on the daily chart, mark a zone, and wait on 1H for a close back above with rising participation. Enter on the retest; stop beyond the invalidation wick; target prior swing with room for extension. Record the outcome and context to iterate.