Currency pair AUD/NZD (Australian versus New Zealand dollar): trading features and behavior

Currency pair AUD/NZD (Australian versus New Zealand dollar): trading features and behavior

The AUD/NZD currency pair is a commodity asset with a focus on the Australian and New Zealand economies.

The AUD/NZD currency pair is a combination of the national currencies of Australia and New Zealand. It is formed as a cross-rate pegged to the US dollar. The Australian currency is the base component, and the New Zealand currency is the quoted one.

Both dollars (Aussie and Kiwi) are commodities. The economies of states depend on commodity exports to other regions, so this directly affects the position of the currency pair.

The asset demonstrates its stability, since both currencies are exposed to the same factors. Trend reversals are much less common here than if we analyze other pairs.

But this predictability does not interfere with showing dynamics, for example, during a trading day it can reach 100 or more points.

Components of the AUD/NZD currency pair

AUD/NZD is the ratio of the Australian and New Zealand dollars. That is, how many Aussies (AUD) can be bought in kiwi equivalent (NZD). The close relationship between the economies of both states determines the trading positions of the pair, most often the change occurs in the same direction.

Since the pair is formed as a cross rate through the US dollar, it means that the movement of NZD/USD will be similar to the movement of AUD/USD. At the same time, price movements are not characterized by high volatility.

The Australian dollar is the official currency of the Commonwealth of Australia, is in the top 10 most popular currencies in the world, and is in 6th position in terms of trading volumes.

The Aussie accounts for almost 5 percent of global foreign exchange transactions, and traders are attracted by the high interest rate and liberal foreign exchange market policies, also stable movement.

The New Zealand dollar replaced the pound and has been the country's official currency since 1967. Since New Zealand is the world's wool and gold exporter, its currency is popular.

When trading AUD/NZD, it is important to pay attention to dollar dynamics and the fact that each of the currencies can react to it in different ways.

Features of the behavior and analysis of each currency in the AUD/NZD pair

It belongs to the group of relatively highly liquid instruments, because both states are located close to each other and maintain close relationships. The asset is widely popular both in the Forex market and in the binary options sector, and the peak of trading activity falls on the Asian session.

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Direct pegging to the US dollar determines the fact of influence on AUD/NZD positions.

Can be analyzed separately AUD/USD and NZD/USD, and then combine into a single graph. Take into account key indicators of the US economy, in particular, the unemployment rate, GDP, discount rate, etc., in order to correctly predict the movement of an asset.

"Australian dollar-New Zealand dollar" has a high correlation rate, which gives traders certain advantages in trading. The relationship is due to economic relations and features of monetary policy. Australia and New Zealand are cooperating with Japan - if the exchange rate of one of the currencies changes, the positions of other currencies will also shift.

How to correctly trade the AUD/NZD currency pair?

When planning to choose this asset for trading, it is important to consider the following features:

  1. Both countries are rich in natural resources and minerals, so this factor plays an important role in the assessment of each currency and the pair as a whole, the Aussie and Kiwi belong to the group of commodity assets;
  2. The New Zealand $100 bill features the profile of Lord Rutherford, who was the founder of nuclear power;
  3. Australia ranks third in the world in the production of gold, so the exchange rate of its currency depends on the value of the precious metal on the world market;
  4. New Zealand has a developed agricultural sector, exporting up to 24 percent of the world's dairy and agricultural products;
  5. Due to direct correlation, both currencies will benefit from strong positions in the commodity market.

Trading recommendations when working with the AUD/NZD currency pair

Refers to liquid instruments, the largest activity on trading deals falls on the Asian session. The New Zealand economy is focused on the export of sheep wool and products made from it. There are close trade relations with the USA, Australia and the states of the Asia-Pacific basin.

The key factors in analyzing the positions of a currency pair are the following data for each country and its partners:

  • the level of GDP;
  • discount rate;
  • unemployment;
  • new workplaces.

The dynamics of the US dollar and economic activity from China have a direct impact.

As far as monetary policy is concerned, in New Zealand the Central Bank regulates the money supply for all individuals and businesses in order to manage inflation and economic growth.

In Australia, the situation is similar, while the news comes out almost at the same time - the market starts to revive and form transactions in the carry trade mode.

In other time periods, it makes sense to trade on the price difference in commodity markets. Also, Australia is exposed to the influence of the gold rush, when international banks announce the financial results of the first quarter. During this period, the precious metal is in greatest demand.

In general, the Aussie-Kiwi exchange rate is stable, sometimes there are small exchange rate fluctuations. Suitable for trading for beginners and experienced traders, you can operate with both small and large amounts of capital and get a good margin with minimal risk.

AUD/NZDF chart

A live chart for the AUDNZD currency pair is an ideal solution for those who do not want to install MT4 for analysis.


Technical analysis

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