Traders from all around the world enjoy trading AUDCAD. One reason for its popularity is the amount of information available on each country's economic and political circumstances, any of which may influence the currency pair. Traders looking to take advantage of market volatility are drawn to the AUD/CAD exchange rate's constant swings and ample liquidity.
The rate fluctuations can be caused by a variety of factors. Australia and Canada are both commodity-dependent economies with similar outlooks. Canada is primarily an oil, wood, and grain exporter, while Australia focuses on minerals (particularly iron ore and gold) and livestock. The two major influences on global commodity prices are China and India, which happen to be Australia and Canada's main trading partners. This results in the AUDCAD exchange rate being highly sensitive to changes these markets.
The AUDCAD pair is also sensitive to market events and economic data releases from Australia and Canada, making it an exciting and dynamic currency pair. When trading the pair, keep an eye on the following economic indicators: price inflation, industrial production, trade flows, retail sales, GDP, employment, and interest rates. Keep an eye on any planned central bank meetings as well. Any statements made by the Bank of Canada or the Reserve Bank of Australia might cause a stir in the market. Day-to-day news flow, elections, and policy changes, as well as economic stability expectations all have an effect on AUD/CAD prices.
The Australian dollar is the fifth most widely traded currency in forex markets, with the Canadian dollar two places lower at seventh. Both the Canadian and Australian economies are largely reliant on global commodity markets. In Canada, large stores of several of the world's most important commodities including timber, oil and natural gas account for a significant portion of the country's GDP, which has an immediate influence on the value of the Canadian Dollar.
Additionally, Australia benefits from a plethora of natural resources and agricultural production. With significant stores of gold, iron, coal, and aluminium discovered in the country, as well as a large agricultural sector that produces plenty of wheat, beef, and wool. Demand for these products are directly tied to the nations GDP, and the demand for AUD.
The AUDCAD correlation is usually positive, meaning that when the value of one currency rises, the other tends to follow suit. This can be explained by their similar economic characteristics and close ties with China and India. The correlation can also be negative as both AUD and CAD are negatively correlated to the USD.
The Australian dollar is a sought out currency particularly due to what is colloquially known as the 3 G's - Geology, Geography and Government Policy. Starting with Geology, when you consider Australia's large natural resource reserves and the importance of these natural resources in the Global economy, the high demand for the AUD to purchase these resources is easily understood.
Geographically, Australia's positioning in the Asia pacific region has allowed for the country to instil many strong trading partnerships with Asian trading partners, many of which have growing economies and a growing appetite for Australian exports.
Lastly, when it comes to governance, steady interest rate levels, stable governmental institutions and a reduced intervention of currency markets, are all factors that make investment in Australia very attractive. The AUD is the currency used to purchase goods/invest in Australia and as Australia grows, so to will the demand for the AUD.
The Canadian Dollar has established itself as a global currency that may be used to buy commodities throughout the world. China, India, and other emerging nations' growing demands for resources have aided the rise of the Canadian Dollar. As the world's 12th largest exporter, demand for the Canadian dollar remains robust, to the point that it has joined an exclusive club alongside seven other currencies that make up 80% of forex trade volume.
Additionally, Canada's tight trading links with the United States mean that traders of the Canadian dollar watch events that unfold in the United States very closely, so in addition to being very dependant on the state of Global commodity markets, Canada's currency can also be influenced both positively and negatively by its noisy neighbour below.
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The Canadian Dollar and the Australian Dollar are two currencies that you can trade with each other. The CAD is a currency that is used in Canada, and the AUD is a currency that is used in Australia.
AUDCAD refers to how much AUD can be purchased by exchanging 1 CAD.
Forex pairs can be traded 24 hours a day, seven days a week, but there are certain periods when the AUD/CAD currency pair is more volatile. Between 19:00 and 04:30 (GMT), the AUD/CAD currency pair is usually most active.
If you are interested in focusing on the impact of commodity prices on FX, then this is a fantastic currency pair to look out for. With a decent amount of liquidity and some good volatility, AUDCAD certainly provides some great opportunities for traders.
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