- What Is AUDUSD?
- Why Should You Trade AUDUSD?
- Factors Affecting the Demand for Australian Dollars
- Factors Impacting Supply of Australian Dollars
- Making the Most of the High AUD, Australian Dollar
- Ups and Downs in AUDUSD Currency Pair
- Australia & Inflation & Australian Dollar’s Willingness to Respond
- Trading Gold and the Australian Dollar
- Effects and Factors that Lead to Depreciation of the Australian Dollar in 2008?
- Will the Aussie Dollar be Successful in Equaling the USD?
- The Australian Dollar’s Long-Term Movement & Trend
- Australian Stock Exchange
- Can USA Citizen Trade on ASX with Aussie Broker?
What Is AUDUSD? up
AUDUSD is a popular currency pair among in forex market and among forex traders. This currency pair is popular among currency traders to a great extent primarily because of lack of intervention by Australian Government in the FX market. Besides this the fact that the Australian economy and government are relatively stable, plus the AUD does seem to offer diversification benefits in a portfolios that contains the major world currencies is another important reason for it being traded so widely and enjoying the popularity that it does. The reasons for this could range from AUDUSD’s exposure to Asian economies, the commodities cycle and so on.
The Australian Dollar or AUD is sometimes also referred by names like “Pacific Peso” the “Aussie”. It is represented by AUD or A$. It is the official, government certified, internally recognized currency of the Commonwealth of Australia. This includes the Australian Antarctic Territory, Christmas Island, Cocos Islands, Heard Island and Mc Donald Islands along with the independent Pacific island states of Kiribati, Nauru and Tuvalu. AUDUSD has the highest exchanges and then with other currencies like JPY and CAD.
The Australian Dollar is the sixth most traded currency in the foreign exchange markets and AUDUSD is the most popular currency pair in currency market. The five currencies ahead of AUD are the United States dollar (USD), Japanese yen (JPY), Euro (EUR), British Pound Sterling (GBP) and Canadian dollar (CAD). This counts for approximately 5% of foreign exchange transactions done across the globe. This pair is one of the pairs that makes strong trends.
Each Australian Dollar (AUD) can be broken down into 100 cents. As per information generated till recently the smallest coin circulating is equal to five cents; one and two cent coins were discontinued in the early 90s and were withdrawn from circulation. Cash transactions done in AUD are rounded up or down to the closest multiple of five cents. In currency market, AUDUSD can be traded from minimum 0.01 or 1000 unit.
For many years now Australia’s balance of trade has been depending upon commodity exports like minerals and agricultural products. This influences the relative value of the dollar and so the value of 1 AUD to USD significantly during the business cycle. It rallies during global booms as Australia exports raw materials, and drops when mineral prices slump or when their domestic spending overshadows the export earnings outlook. AUDUSD is one of the best pairs for trading on the small time frames like 5min.
AUDUSD movement relative to the global economy is normally found to be moving in the opposite direction as compared to the other major currencies, which are more popular during slumps as this is the time when the traders move value from falling stocks into cash. This results in high volatility and unorthodox movement in exchange rates. And this has contributed to the AUDUSD status as one of the most popularly traded currency pairs in the world to quite an extent.
The Australian Dollar will appreciate against the US Dollar when one or more of the following conditions exist: If there is large US current account deficit; If Australia has benefited from rising commodity prices, commodities which Australia produces in abundance; and finally if the US interest rates are dropping and become lower than Australia and the US economy starts weakening.
Let us also look at how would, AUS Dollar appreciation impact the economy. The appreciation of AUD would make the Australian exports more expensive. Therefore there will be a fall in demand for Australian exports. The imports into the country will get cheaper, as a result of which demand for imports will be on rise.
This condition is generally likely to get worse with the current account deficit. According to The Marshall Lerner condition if PED of exports + PED of imports is greater than 1 then an appreciation in AUD will worsen the current account.
In the short term, the demand has always been seen to be inelastic; however over time as consumers become more responsive to price changes, the current account may improve in the short term, but there is a chance that it worsens, if the appreciation lasts any longer.
Evaluating Australian Dollar: There are many factors that can impact the Australian current account other than the exchange rate between US and Australia. It also depends on the value of the Aus dollar against its other main trading partners like Japan and the EU. Other than that it also depends on the level of consumer spending and the imports.
The Australian Dollar is a “Commodity Currency” like the Canadian Dollar. Here the profits are primarily dependent on the price of Gold, Copper, Nickel, Coal and Wool. Movements in the AUD or Aussie are also dependent on movements in the Japanese Yen, with the two currencies tending to move in tandem. Generally, a stronger Yen leads to a stronger Aussie and a weak Yen leads to a weaker Aussie.
The Australian Dollar will benefit if the price of Gold picks up. And the price of Gold is more likely to pick up if the Inflation scare across the US intensifies. Apart from Inflation, the factor that could support the Australian Dollar is the possibility that with a recovery in Asia, commodity prices may find a base, if not positively strengthen it.
Why Should You Trade AUDUSD? up
Aussie dollar (AUD) is a good currency choice for investors. Why?
The Australian dollar for quite some continues to be the number one choice for currency investors. There are several factors which have come together and have made the Aussie dollar the best performing major currency over the past 12 months, with an increase of over 30% versus the US dollar.
The first thing to note is that Australia has a commodity-based, export-driven economy with a strong central bank foundation. Australia is entering their 19th consecutive year of economic growth, after steering past the global downturn that the economies across the world have been hit by during the past two years.
Australia’s healthy and happening trading relations with China have allowed them to weather the global crisis much faster than their G10 fellow competitors and contemporaries. It goes without even having to mention that the steady growth in China has kept commodity prices on the rise, which has been constantly supporting the raw material exports of Australia and managing stability for their currency, AUD.
Growth in the Australian economy saw a rise in the fourth quarter at the fastest pace in two years as their GDP climbed 0.9% from the third quarter and 2.7% year over year. The economy is further expected to grow 3.25% this year and then 3.5% in the following two years. You will all agree that it is quite a commendable growth rate in an uncertain global climate.
The strong economy has also given the Reserve Bank of Australia an opportunity window to increase interest rates, making their currency even more attractive for investors. The Reserve Bank of Australia was amongst the first G10 central bank to raise interest rates, and they have increased them over 5 times in the past several central bank meetings, six to be precise.
This increase in interest rates has pushed up the yield differential between Australia, and the US, and Japan. High interest differentials give rise to the’ carry trade’ investment opportunity, where investors start to borrow at the low rates available in Japan or the US and invest the same into the Australian market that earns them higher yield due to their high interest rates. Carry trades in the past (in 2007-2009) pushed the Australian dollar to double-digit returns as compared to the US dollar and it is expected that it will continue to encourage investment inflows into the AUD throughout 2010.
Factors Affecting the Demand for Australian Dollars up
As compared to USD or currency of any other country, the value of AUD will go up if the demand for their products is higher in US and other markets, Their interest rates are in favor and the confidence level of investors is positive, under all these circumstances inflow of capital in Australia will take place which will increase the and strengthen the value of A$.
Factors affecting the demand for A$ are listed as under:
The first factor is that when foreigners demand for Australian goods and services or they are demanded by overseas consumers, then the costumer is required to convert the currency into Australian dollars to pay the for goods and services made in Australia. This means that increase in the demand for Australian exports, is bound to increase the value of the Australian dollar.
We will get a little deeper into this and will also discuss factors that can influence the demand for exports:
Tastes and preferences of consumers for Australian goods and services will influence the demand for it and eventually money inflow will happen. IT is important to know what are overseas customer interested in for which they are ready to shell out money. Tourism saw a bid boom and 9/11 proved to be a big setback.
Likewise, changes in world economic conditions could also impact demand for Australian dollar. For example changes in the international business cycle can impact the demand for Australian exports in a bid way. Recession hit the A$ demand for a while. However, the resources boom of 2007-2008 had a big impact on the value of the Australian dollar which steadily appreciated during that time as Australia sold more and more raw materials to major manufacturing nations like China and Japan.
Another factor that could increase the demand for Australian Dollar is the International competitiveness vis-à-vis the cost of goods and services. Rise in cost or rates could cause a dent and loss of export markets, which will directly reduce the demand for Australian dollars, and the Australian dollar, will drop in value. On the contrary lower rates of inflation are more likely to increase the demand for Australian exports, and appreciate the value of the Australian dollar.
Australian dollar can also strengthen in value as a result in increased Capital inflow. Foreign investors wanting to invest in Australia in their own currency for Australian dollars is one such factor. Things that can influence investment decisions of overseas institutions or individuals could depend on interest rates in a major way. The higher interest rate compared with overseas interest rates will increase capital inflow and the demand for Australian dollars.
Besides interest rate, the foreign investor will also be looking at the higher levels of domestic economic growth which will influence the size of the capital inflow and increase the demand for Australian dollars, causing a currency appreciation.
If foreign investors think that the value of the Australian dollar will increase in the future, they may sell other currencies and buy Australian dollars. This speculation can also bring in an increase in the demand for Australian dollars and lead to building upward pressure on the exchange rate. We all know that all global Forex transactions are done with speculation in mind for earning profits.
Above mentioned were some of the factors that can increase the demand for Australian dollar.
Factors Impacting Supply of Australian Dollars up
In a nutshell when Australian inflation, interest rates and general confidence of investor is lower than what prevails in the US or other economies, the value of AUD will hit the bottom. And the value of USD or currency of other economies will increase.
Factors that can Impact supply of Australian dollars are just the opposite of factors influencing demand for them. Some of the factors are listed as under:
If the Australian demand for imported goods and services increases, Australian dollar will move out of country into another economy. This supply of Australian dollars into another economy will give that economy an uplift but their own will suffer. The increase in supply of Australian dollars puts downward pressure on the value of the Australian dollar and the value of A$ goes down in global economy.
If money flows at or from any level out of Australia then it impacts the value of Australian dollar adversely. An increase in capital outflow can result due to many reasons. It can happen due to higher interest repayments rates on overseas loans or increased demand for foreign assets, like shares and real estate by Australian residents.
This means that investors will need to sell Australian dollars in the Forex markets to obtain other countries’ currencies. The increase in the supply of Australian dollars could cause a decrease or depreciation in the value of the Australian dollar. The level of domestic interest rates and investor confidence in the Australian economy can also influence supply of Australian dollars in a huge way. In fact temperament of investors has resulted in an unexpected turn around on many occasions.
Another reason for Australian Dollar to weaken lies in its inflation rates. If inflation rates were high in Australia imported goods and services would become much cheaper as compared with products and services produced domestically or in local markets of Australia. When this happens the consumers will start preferring the cheaper, imported goods and services, and this will result in outflow of Australian dollar to the outside economies.
Speculation will also lead to weakening of Australian dollar. Supposing that the speculators lose confidence in the economy and feel that future values of the Australian dollar will be lower than present levels, A$ will be devalued. This happens because as speculators will start selling Australian currency to curb future losses, the supply of dollars increases, and this downward pressure on the exchange rate.
Making the Most of the High AUD, Australian Dollar up
With the Australian dollar hitting a yearly high, it’s a great investment opportunity for those heading overseas. The high value is also likely to impact you in terms of investing.
Coming to the commodity prices, the Australian dollar is at the highest level in 14 months. In 2009 the Aussie dollar had a good run for quite some time and did rise 30% against the US currency. Which is indeed terrific news for commodity prices, because commodities are traded mostly in US dollars. If the US dollar goes weak, it makes the commodity cheaper in non-US dollar terms. That is the reason we’ve seen oil prices reach a yearly high, and gold prices hitting all time record highs.
This high also spells good news for the importers. A high value currency is great news for importers and naturally bad news for exporters. For an importer, it means that they are able to buy products from overseas at cheaper prices. It works the same way as internet shopping. Buying things from the US and having them shipped over to Australia is at the cheapest levels in more than a year.
Importers can get their products at cheaper prices, and as we all know that not all of that cheap price is passed onto consumers. That makes the profit margins fat for importers. Some of the importers that have been doing well on the Australian share market due to the high Aussie dollar are the retailers like, Harvey Norman, JB Hi-Fi, David Jones and even some of the staple companies like Woolworths etc.
When we turn the tables and take the view from the other side it doesn’t sound like good news for exporters. This means that companies that depend on their earnings from exporting overseas are impacted negatively. When these companies bring their profits back into Australian dollars, they lose on the currency exchange.
Coming to investors, if they have done investment overseas, they’d want the Aussie dollar to fall which will help them make money on the currency movement. On the other hand if the Aussie dollar rises while investors have invested overseas, they make losses on the currency fluctuation which eats into the performance of our investments.
When companies are making money overseas, they want the currency to fall so that the movements work in their favor. So in a nutshell sd an investor do consider investing overseas, but be cautious with exporters and yet be positive about the impact that the high Australian dollar is likely to have on importers.
Ups and Downs in AUDUSD Currency Pair up
Around first week of April 2010, the Aussie dollar slipped marginally lower against the US dollar mainly because of the uncertainty surrounding the euro zone region.
There were reports about accelerant growth of China’s first-quarter which also weighed on the risk appetite during April, as it made investors to think and speculate that the may be the world’s biggest consumer of commodities will raise interests to prevent its economy from overheating.
It is obvious logic that an interest rate hike would somehow cool China’s appetite for natural resources, which actually could most likely reduce the demand for Australia’s exports. As a result of this, such speculations and expectations by investors weighed on commodity prices and left the Australian dollar vulnerable to selling pressures.
Under different situations the growth in China’s economy would have boded well for AUDUSD, but for the current development and speculation thereof that cast clouds of uncertainty over China’s most likely strategies next. Besides this uncertainty surrounding the euro zone region may encourage the RBA to pause potential rate hikes. Meanwhile, mathematicians, academicians and analysts at Commonwealth Bank of Australia believe that the Aussie dollar will rise to 95 US cents by the end of June, as global growth goes on to strengthen. The bank’s strategists contemplate that AUDUSD will retreat 90 US cents by year-end. However as they expect the Federal Reserve to raising interest rates during that time, reducing Australian assets’ yield advantage.
Also, on the other hand China’s tightening fears have also weighed on AUDUSD. Over the April mid weekend China took some steps to take control of the speculative buying of real estate, which sent Asian stocks and commodities low. This trend is a sort of signal that the Chinese government has warned domestic banks to stop loans for third-home purchases – a development that’s likely to satiate China’s appetite for natural resources and hurt Australia’s exports. Royal Bank of Scotland strategists and key members are quite bullish on AUDUSD in the short term. They however strongly believe that AUDUSD is likely to rise to 95 US cents in June and September before slipping back to 90 cents by year-end, as by that time it is time for the US to start viewing and raising interest rates again. Meanwhile, Morgan Stanley predicts the Aussie may tumble 16% by year-end, as higher borrowing costs will curb growth.
We will have to keep a watch on all of it and will have to explore more to make the most out of AUDUSD currency pair. After all it’s the 6th most widely traded currency pair and can fetch investors good returns, provided investors keep a close watch on the happenings and events that are likely to impact Australian Stock Market and value of Australian dollar.
Australia & Inflation & Australian Dollar’s Willingness to Respond up
Inflation has always been a crucial factor that mathematicians and currency analysts consider, if only because it has a direct relationship with interest rates. Central banks have a permanent job of keeping inflation under control, and so signs of rising inflation indicate a strengthening currency.
We were all witness to the record rate that Australian dollar reached against the dollar for 11 months, highest being on or around 10th March 2010, as the USD was trying to fight the major currencies. This clearly reflects and is symbolic of the strength of the Australian currency.
The Australian dollar traded within 1 U.S. cent of a five-month high as the corporate earnings on a high did a lot of good in boosting the confidence in the global recovery and the demand for higher-yielding assets increased. This was sometime between 2nd and 3rd week of April. In its continued run the Australia’s dollar was at 93.10 U.S. cents and it further climbed to 93.89 on April 12, the highest since Nov. 16. It bought 86.77 yen from 86.86 yen yesterday when it advanced 1.8 percent. The Aussie reached 87.54 yen April 14, the most since September 2008.
A little earlier the Australian dollar got a sharp Phillip following the message by the Australian central bank president, that the bank is expected to raise interest rates in next few months. Bank President, Glenn Stevens brought to the notice of all the risks threatening the economy and moderation, adding that low interest rates was likely to create a bubble in the housing market.
The comments of the Australian Central Bank President were surprising, and avoided by most of the world leaders to admit to inflation. To the extent that the U.S. President Barack Obama would not think that the debt of 12 trillion dollars could damage the economy.
But looks like not much has or is likely to change until some more time, the U.S. dollar continues to tread, trading in decline. Now the economists warn Merrill Lynch that the dollar would suffer a prominent decline in value in the coming few months and is expected to do better and stablize only in mid-2010.
There is a 40 percent chance the Reserve Bank of Australia increasing the rates when policy makers meet in May, according to a Credit Suisse AG index. It’s time world leaders looked at options, especially toward the mainland Australia, where the Forex dealers would do a lot better.
Trading Gold and the Australian Dollar up
Australia is one of the biggest producers of gold; therefore, gold prices have an impact on the pair. Australia can be categorized as a service sector economy. However the country produces abundance of commodities as precious and ‘in demand’ as gold and copper. Therefore the Australian economy can be very sensitive to the moves in commodity prices.
Generally speaking, when gold prices are on an upswing or on a rise so to say, that is the time Australian dollar appreciates in value. New Zealand and Australia are in close proximity of each other and that makes Australia a preferred destination for exporting goods for New Zealand. This means that the economic health of New Zealand is associated to a great extent with the economic health of the Australia. It would be interesting to note that the NZD/USD actually has an even stronger correlation with gold than the AUDUSD does.
Over the last so many years the Australian dollar as a free floating currency has generally served as a proxy for gold. This is so because Australia is the second largest producer of gold. The first one being the South Africa. Fluctuations in the price of gold have seen corresponding rise and falls in the Australian dollar as explained above. Like the Canadian and the New Zealand dollars, the Australian dollar is also a commodity currency.
Let us also throw some light on the fact why Australian Dollar is considered risky. The Australian dollar has been at its highest for more than decade against the euro and getting higher against the pound. It is important for investor to dig deeper and find out about the situation in Europe and the impact that this is likely to have on the Australian share market, especially if he is concentrating on trading in AUDUSD currency pair.
The Australian dollar is seen as a risky currency despite their robust and ever growing and strengthening economy and growth profile, because their currency is tied to the global demand from commodities, which can be considered risky. What would the situation be if the commodity boom suddenly busts. This is the main reason why some of the perception around safe option comes from the role of the US dollar and Japanese yen which are considered as a cheap funding currency. That is the reason why every time that the things start looking bad, people go back to stocking the US dollar and selling the Aussie dollar.
Effects and Factors that Lead to Depreciation of the Australian Dollar in 2008? up
The depreciation of the Australian dollar against USD in 2008 required Canberra to spend a further AUD 1.3 billion (USD 830 million) per year to cover the rising costs of importing defense equipment. The February 2008 report published by the Australian Strategic Policy Institute (ASPI) – said that although Australia’s military spending power had been affected by the global economic downturn, continued defense investment was expected to spur domestic growth.
A depreciation of the A$ could have been caused by a wide variety of factors. But the main factor causing depreciation was low demand for Australian Goods and Services from overseas markets. This situation may have resulted from several reasons. Resulting of a world economic recession, for one. They generally faced low levels of production growth, employment growth, income and expenditure in overseas countries which meant that fewer people could afford to purchase Australian exports.
Domestic Inflation could also have affected Australia’s exports if the inflation level is high, especially if it was higher than their major overseas trading partners, Australia’s export prices should have been increased and the competitiveness could have been greatly reduced.
Domestic Inflation could also have meant that domestic goods lost their competitiveness with imported Goods and Services. When the A$ went down and was depreciated, it became cheaper for overseas investors to buy that resulted in increase the level of capital inflow into Australia.
An increase in the demand for imports can also have an effect on depreciation of the A$. If domestic producers couldn’t sufficiently satisfy the wants of the domestic market, Imports increased and the A$ will depreciated.
Similarly, other currencies became dearer for Australian investors to buy and therefore they saw a decrease in the levels of capital outflow.
There were also negative effects of a depreciation of the A$. Because imports were dearer, Australia also had to deal with imported inflation and cost pressures which were added to the domestic inflation rate. Depreciation also meant that there was a slowdown or downgrading the standard of living of Australians as income derived from total production (GDP) was now able to purchase fewer imports and therefore fewer wants could be satisfied.
Will the Aussie Dollar be Successful in Equaling the USD? up
Through this article we will try to address the issue whether the Australian Dollar be able to strike uniformity with the USD?
Analysts and economists are of the opinion that the fortunes of the Aussie dollar this year will be shaped by the type of growth across the glove and won’t be limited to high interest rates exclusively. As more nations are seen to be recovering from the global recession, the interest rate margin between Australia and other nations will begin to close next year.
Where the investors are concerned they are beginning to show more interest in new and emerging Asian markets. However, in the short term the Aussie dollars future is also going to depend on how those markets stand up and deal with those economies that are far more advanced, but that aspect will continue to struggle and come up quite often before things stabilize all over again.
Another powerful factor in driving the Aussie dollar is the way commodities are held when compared with manufactured goods. It is a trend that the academicians and analysts think will continue throughout the year.
It is known that the Aussie dollar has not had equivalence with the US dollar from before the year 1983; economists strongly believe that by the end of this year we could actually see it happen. In the year 2009 the Aussie dollar was consistently at number four – the 4th strongest out of the 120 currencies which were being globally monitored. And during the last year A$ appreciated a little above 21% against the US dollar. This is no mean feat in itself.
So while financial experts are still cautious, they do expect an improvement in the value of the Aussie dollar against US currency. But of course that is not expected to happen all of a sudden; it will happen in due course after its share of ups, downs and uncertainties. The trend is usually that the rates will rise, fall and then rise again and the trend is likely to remain. An upswing in the mood has started to show and as a result, optimism is emerging.
The Australian Dollar’s Long-Term Movement & Trend up
The Australian dollar’s exchange rate particularly when we try to see it in relation to the American dollar, has received a considerable attention in research, and several theories have come forth that explain its trend and fluctuations.
Based on the conclusion of this research it can be said that Australian dollar- the commodity currency quite clearly depends on the terms of trade. And terms of trade in turn depend on commodity prices. Some of the papers submitted by academicians we can conclude and assume the possibility that the Australian dollar’s behavior is explained by a handful of cycles of mainly harmonic frequencies.
With the help of the principles of Fourier analysis, a simple regression provides considerable evidence about the existence of these cycles. Besides this a crucial finding into the commodity realm suggests that these cycles could be related to various cycles of mining and producing minerals. If the theory can be believed, There is a simple and substantial explanation of the long term trend and fluctuations of the Australian dollar exchange rate and probably of exchange rates of many other commodity currencies besides the AUD.
Coming to the latest fluctuations in AUD, Dollar’s Budding Rebound is stalled as market is waiting for decision of Fed’s Guidance and the Australian Dollar is on the Verge of Breakout, Trend ahead of RBA. Perhaps the most crucial economic event is the Reserve Bank of Australia rate decision.
The decision is scheduled for an unusual 4:40 GMT release. This announcement sounds even more unpredictable because of the return of liquidity after an extended holiday weekend and a heavily speculated outcome for the policy decision itself.
At present an uneasy consensus amongst economists is calling for the fifth 0.25 basis point hike since the financial crisis ended to 4.25 percent, whereas the market via Credit Suisse overnight index swaps is pricing in a 65 percent probability of the same thing. Either way we look at it, some level of adjustment from one side of the market or the other looks inevitable.
There is certainly a premium left open to confirmation of a hike on one hand – A trend that would eventually fit the advance in risk consumption and accommodation that domestic market has missed out on in its time off. On the other hand, a hold would undermine the currency’s solidly hawkish platform to quite an extent. With AUDUSD stuck in congestion, AUDCAD starting to break from a long-term wedge and AUDJPY turning from an 18-month high, this could be interesting. Let’s keep a watch!
Australian Stock Exchange up
Australian Stock Exchange is the principal market for trading stock and other securities in Australia. It was formed in 1987 after amalgamating six state stock exchanges. Australian Stock Exchange has offices in most state capitals. Let’s dig a little deeper into it.
The Australian Stock Exchange (ASX) is a relatively new entity that was formed in 1987. Before that as mentioned earlier, the Australian stocks could be traded on six different exchanges. All the bigger cities had their own stock exchanges. Ever since the inception of first Australian exchange in founded 1861 in the city of Melbourne, Australian stocks have been traded by three methods.
The first was the old style of verbal auction, where one guy would call out names of stocks for bidding. But around 1969 when Australia went through its first mining boom, the trading volume increased dramatically. As a result of this boom, verbal auction became redundant. a system that was not equipped to handle multiple layers of transaction. Australians replaced the verbal or call out system with the chalk system also referred to as “Chalkies” in those times. Chalkies scribbled buy and sell orders on chalkboards on an ongoing basis. Finally when Australian Stock Exchange was formed, the decision to use an all-digital trading platform was agreed upon by all concerned.
This platform is termed as SEATS. Stock Exchange Automated Trading System. After it being implemented the trading floors were closed. On SEATS, brokerage fees are very low. Fees ranging from .12 AUD to .18 AUD are very common. Since 1996 ASX has become a publicly listed company. Prior to this demutualization Australian Stock Exchange was owned by stockbrokers.
ASX or Australian Stock Exchange is the 8th largest exchange. On the Australian Stock Exchange, trading hours are a short 10 AM to 4 PM Sydney time. The peculiar feature associated with ASX is that it does not open all stocks simultaneously. To prevent traders from timing the opening transactions, various categories open randomly during the first ten minutes of the market opening.
The only major Australian bank participating on the exchange is Macquarie Bank. Foreign ownership accounts for a vast 40% of Australia’s markets with Institutional ownership at 30% and the retail investors accounting for 30% as well. Options were first added to the ASX in 1976, followed by warrants in 1990, fixed income securities in 1993 and futures in 1994. From the beginning, fixed income securities were traded electronically. Futures were initially traded on the Sidney Futures Exchange – an entity separate from the ASX . The merger was announced between SFE and ASX in recent past.
Indexes tracking the Australian Stock Exchange are the S&P ASX 200 Index and the S & P ASX 50 Index. These indexes track the largest 200 and 50 stocks on the exchange respectively. Stocks on the ASX 200 account for 89% of Australian market capitalization. The most comprehensive index is the famous All Ordinaries Index. It’s aim is the encompass the whole Australian market. The All Ordinaries Index tracks the 500 biggest companies.
Can USA Citizen Trade on ASX with Aussie Broker? up
There are an increasing number of US residents, into FX trading, and trading of shares/stock, who are interested in finding out whether it is possible for them to trade in Australia Stock Exchange and also whether they can engage services of an Australian broker. Forums are always buzzing with these questions and there you can find a wide range of answers starting from suggestions to flying to Australia for opening a bank account to legal tangles that are likely to not let it happen.
Some of these citizens join Interactive Brokers in the US and trade the ASX market. And these are the ones who are advocating the fact that there is no need to open a separate bank account in Australia or going through the trouble of producing address and identification proofs and so on.
A non-Australian resident can open a CFD or bank account in Australia but then for this he may have to undergo an ID check. This however is possible without entering the country. Westpac or any other bank will allow the non-residents open accounts however the ID check in your own country can become a complicated process which may involve getting a letter from the bank manager where you already have an account, or Tax Accountant/Lawyer etc.
On taxation front there is indeed a considerable advantage to opening the account in Australia especially with a non-Australian address, and trading from this account. The Howard government introduced the Tax Laws Amendment (2006 Measures No. 4) Bill 2006. Primarily it mentions that foreign investors that trade Australia shares are not required to pay the Australian Capital Gains Tax.
As to the specific question about American citizens, as far as my knowledge goes US Brokers are not permitted to offer CFDs, because of the regulation that exist in however that would not necessarily restrict US citizens from trading CFDs with a non-US broker. Guess one would need to speak to a US lawyer to clarify that. Once the legal eagle intervenes you should have a clear answer to that.
The two major line of thoughts or approaches in trading consolidation will be to either wait until breakout, or go down to low time-frames and shift to scalping within the pattern, the latter option is considerably more demanding and less likely to help us get fair returns or an encouraging reward to risk ratio. Scalping has always been like that and it is no exception this time round too. Let us wait for the action to unfold!
1. What are other common names for Australian Dollar?
Australian Dollar also called AUD, is known by many other names which are quite popular amongst locals, investors, and traders. They are “Aussie”, “Pacific Peso” (locally), “The Royal” and “The OZ” are the most common names used for the Australian dollars.
2. Which are the countries using Australian Dollar AUD?
The countries using Australian Dollar is Australia, Kiribati, Nauru, Tuvalu, Cocos Islands, Christmas Island, and Norfolk Island.
3.Is AUD widely traded?
Yes, AUD, or Australian Dollar is vey widely traded. It is the 6th most traded currency in the world, after theUSD, EURO, YEN, Poung Sterling and Swiss Franc.
4. What is the currency symbol and ISO-code for Australian Dollar?
The only official ISO code as currency traders and money exchange offices are using is AUD.
4. What is the History of the Australian Dollar?
In the year 1966 the Australian Dollar replaced the old Australian pound currency. The conversion rate initially was two dollars per pound / ten shillings per dollar. Exchange rate was fixed against the pound sterling at an exchange rate of 1 pound = 2.5 U.S. dollars and 8 shillings = 1 AUD. The following year, Australia gave up the pound. When pound sterling got devalued in 1967 against the U.S. Dollar, the Australian Dollar did not comply.
5. What about Currency Crises vis-à-vis AUD?
In the year 2008, the AUD dropped sharply. This was despite the fact that the long interest rates were relatively high as compared with other major trading partners. But then from the latter part of 2009 to early 2010, the Australian dollar showed an upswing and was on a way to healthy recovery.
6. Reserve Bank of Australia – an overview
Reserve Bank of Australia follows an inflation of 2-3% per year and carries ensures stable prices. Low unemployment rate, ensuring that the country is able to maintain 100% employment in Australia. Their economic motives include general economic prosperity and welfare for the people of Australia.
7. Online Forex Trading with Australian Dollar
Australian Dollar (AUD) is part of the 6th most traded currency pairs. Trading currency with AUD is common among individuals as well as international companies that have foreign exchange exposure to Asia and the Pacific region. The economy and the government of Australia are quite stable. Australia and its currency are heavily affected by fluctuations in commodity prices. Also, investing in AUD is about opting for favorable diversification opportunities. AUD has traditionally been a good carry currency, which investor can earn interest on if he holds it, because interest rates have often been seen as higher in Australia than in many other major currency areas. AUD has also become popular among currency traders because the Australian Government does not intervene as such and as much in the currency market.
8. How about the AUD’s value against other currencies?
The Australian Dollar is traded freely under floating exchange rate.