What economy is based on the Australian dollar
The Australian economy ranks 13th in the world in terms of GDP (in American dollars), being behind the main currencies. Among the developed countries, Australia allocates high dependence on commodities. Mineral mining (including energy) is more than 5% of the country's GDP, nickel is of particular importance. Agriculture also plays an important role, not its share (and the relevant industries) accounts for about 12% of GDP. At the same time, most of the products are sold outside the country.
However, the wealth of natural resources did not always have an exceptionally positive impact on the Australian economy. Even with the policy of economic liberalization, which was held in the early 1980s, the country did not achieve the prosperity of the production sector. Instead, Australia has a large balance of payments deficit and considerable foreign debt, suffers from the financial "bubble" in the housing area, and also "affects" the highest major interest rate among developed countries.
What drives the Australian dollar
Since economic models for calculating the "correct" exchange rate of currency are usually based on a couple of economic variables (sometimes on one, such as interest rates), then calculations are often too far from real market courses. When making a trading decision, in order, traders are based on a much larger number of economic indicators. Even speculative forecasts themselves can increase or reduce the currency rate relative to the expected value.
Among the most important publications include data on GDP growth, retail, industrial production, trade balance and inflation growth rates. Indicators are constantly published and are in the free access of such financial publications, such as Bloomberg and Wall Street Journal. Investors are also worth paying attention to interest rates (including scheduled meetings of the Central Bank), statistics on employment of the population and view the daily newsflow for natural disasters, elections, changes in state policy and any other events that can have a noticeable impact on the exchange rate.
However, in the case of Australia, a considerable role is given to a number of other factors. The Australian economy is moving commodities (metals and grain). Therefore, information on the crop and weather conditions, the mining industry indicators and metals prices may also affect the "Australian" position. Fortunately, these data regularly publishes the Australian Bureau of Scientific and Economic Research in Agriculture and Natural Resources on the Internet (Abares).
In addition, the strength of the Australian dollar is closely related to the trade relations of Australia with Asian partners, the raw material cycle and to some extent with the non-cycled state of AUD with respect to other major currencies. During the past cycles, the demand for natural resources from India, China, and to a lesser extent of Japan, led to the strengthening of the Australian dollar, after which there was a fall in the course, since the need for resources weakened.
In general, higher prices for raw materials create a recession (or at least inflexible) pressure in most developed countries. Therefore, when the increase in commodity prices causes traders to worry about the sustainability of the economies of Europe, North America and Japan, the Australian economy looks more prosperous. Therefore, if the trader wants to "play" in raw material vulnerability and (or) increased demand for resources in Asian countries, the Australian dollar becomes a popular alternative, while the currencies of other countries are becoming less attractive, since the relevant economies will rather suffer from the growth of production costs .