AUDUSD pair – Definition and characteristics

Commodity-linked currency

Since Australia is the largest coal and iron ore exporter, the movement of its currency is heavily dependent on commodity prices. That is why the performance of the Australian dollar is tied mainly to China, as China is of the largest importer of Australian commodities.

Traders watch the current economic cycle, how the world's (and especially China's) economy is doing, and at what stage of the commodity cycle are we in. The Aussie follows.

For example, if the world's economy rises at a solid pace, demand for iron ore picks up, and the Aussie usually strengthens. On the other hand, if the world's economy slumps, demand for commodities decreases, and so does the Australian dollar. To sum it up, the Australian dollar is one of the best known cyclical currencies.
 

Performance

When we take a look at the history chart of the AUDUSD pair, there is an apparent bearish trend, starting in 2014. Back then, the Aussie was trading at around 0.95 against the US dollar, nearly reaching parity.

As the Fed raised rates, the interest rate differential evaporated from this pair, making the US dollar more attractive. Afterward, the global economy started to slow, which once again undermined the Australian dollar. In 2020, the sell-off began by the COVID 19 panic, and investors rushed into the greenback, as it is the safest currency in the world. In April 2020, the AUDUSD pair was seen hovering near the 0.60 handle, which is a 40% decline in 6 years, making it one of the best trending pairs in the world.
 

_{Source: Purple Trading Metatrader 4}

AUDUSD – Quotes and trading

If you open our Purple Trading Metatrader 4 platform, right-click on the AUDUSD pair and choose "new order," the following popup will appear:

As you can see, the spread between the Ask and the Bid price is 0.8 pips, but the spread can fluctuate slightly, mainly during volatile times of the day. 
 

Lot value calculation

The minimum amount to trade is 0.01 lot, while one full lot represents 100,000 AUD. So, if you are trading 0.01 lot (or a micro lot), you will be trading 1,000 AUD. The 0.1 lot is also called a mini lot and represents 10,000 AUD. If you want to buy or sell half a lot, you will be trading 50,000 AUD. Two lots are 200,000 AUD and so on.
Besides, you can open a market execution trade, which means that it will be done at the current market price, or you may use pending orders – limit and stop orders. Finally, it is possible to use the stop-loss and take-profit orders when opening the trade, or you can add them later when the deal is live.
 

Frequently asked questions and terms