What currency is AUD? Why is AUDUSD important and how to trade it

AUD is the Australian dollar, the official currency of Australia and one of the most widely used currencies in the global Forex market. The AUDUSD currency pair, which moves between the Australian dollar and the US dollar, has become a popular investment choice for traders worldwide due to its high liquidity, narrow spreads, and moderate volatility suitable for both beginners and professionals.

AUD is a key commodity currency

Australia has a developed economy and is one of the world’s major commodity exporters. In 2025, Australia’s GDP was approximately $1.83 trillion USD, ranking 15th globally. The service sector accounts for about 62-63% of total GDP.

What makes AUD unique is Australia’s export of large quantities of commodities such as iron ore, metals, coal, natural gas, and gold. This makes AUD a “commodity currency”, meaning its value is closely linked to global commodity prices, especially demand from Asian countries like China.

Recent data shows that in the last quarter of 2025, Australia’s economy grew by 0.4% quarterly or 2.1% annually, driven by household consumption and private investment, but still facing risks from inflation pressures and global economic conditions.

The history of the Australian dollar: from local currency to floating exchange rate

The journey of AUD is fascinating, from early colonial times when trade used various foreign coins, to today’s free-floating currency.

Key moments in AUD history:

• 1813: The first local currency (Holey Dollar and Dump) was created for colonial internal use.
• 1901: Australian federation; still used a mix of British coins and private banknotes.
• 1910-1913: Australia adopted its own national currency, the Australian pound.
• 1966: Decimal system introduced; the Australian dollar replaced the pound, with 1 GBP = 2 AUD.
• 1983: Major change—AUD became a fully floating exchange rate, allowing market forces to determine its value.
• 1988: Australia was the first country to introduce polymer banknotes, enhancing security and trust.
• 2000-present: AUD became a commodity currency, influenced by iron ore, gold prices, and Chinese demand.

Why is AUDUSD a favorite among traders?

The AUDUSD pair (often called “Aussie”) ranks among the top five most traded currency pairs worldwide. Data indicates it accounts for about 5-6% of daily forex trading volume.

Main reasons for AUDUSD’s popularity:

1. High liquidity: Massive trading volume allows quick entry and exit.
2. Narrow spreads: The difference between bid and ask prices is small, suitable for traders of all levels.
3. Moderate volatility: Price movements are sufficient for profit opportunities without being too unpredictable.
4. Responsive to fundamentals: AUDUSD reflects various factors such as commodity prices, interest rates, and market sentiment.

Additionally, AUDUSD is a major currency pair, even though it’s not part of the US Dollar Index (DXY). This attracts many institutional and retail traders, keeping it actively traded.

Five key factors driving the AUD

1. Interest rate differentials

When Australian interest rates rise relative to other countries like the US, foreign investors seek higher yields by investing in AUD assets. This increases demand for AUD and causes it to appreciate. Conversely, when rates fall, capital flows out, weakening the AUD.

2. Commodity prices

As a major commodity exporter, higher prices for iron ore, gold, coal, etc., boost Australia’s export revenues, strengthening the AUD. Falling commodity prices tend to weaken it.

3. Global demand and trade

Strong global imports, especially from China, increase demand for Australian exports. Companies convert foreign currencies into AUD to purchase goods, raising demand for the currency.

4. Global risk sentiment (Risk-On/Risk-Off)

In risk-on environments, investors seek higher-yielding assets like AUD, which is linked to growth. During risk-off periods, funds flow into safe-haven assets like USD, causing AUD to weaken.

5. Economic data and policies

Announcements from the Reserve Bank of Australia (RBA), GDP reports, employment data, and consumer confidence significantly influence AUD’s value.

Best trading sessions for AUDUSD

Forex markets operate 24 hours a day, 5 days a week, but different sessions have distinct characteristics and liquidity levels.

Trading session overview:

Asian session (Tokyo)

This session opens weekly, with markets in China, Australia, and New Zealand playing key roles. Generally, volatility is lower compared to other sessions, as fewer traders participate. Focus is often on JPY, AUD, and NZD pairs.

European session (London)

The most liquid session, with London accounting for about 30% of global forex volume. Major pairs like EUR/USD, GBP/USD move strongly. Ideal for traders seeking clear price action without high spreads.

North American session (New York)

Starting around 13:00 GMT, overlapping with late London hours, this session often sees the highest volatility. USD pairs dominate, with US economic data and Fed policies influencing direction.

Practical example of trading AUDUSD

Suppose current AUDUSD is around 0.66362.

Example 1: Long position (buy)

An investor opens a buy order at 0.66362. If the price rises to 0.67362, a 100 pip move, profit calculation (for 1 lot):

• 100 pips × 1 lot = $1,000 USD profit.

The idea: buy low, sell high. When AUD/USD increases, the trader profits.

Example 2: Short position (sell)

If a trader sells at 0.66362 and the price drops to 0.65562 (80 pips):

• 80 pips × 1 lot = $800 USD profit.

Profiting from a decline, by selling high and buying back lower.

Current market outlook and forecasts

Historical context and challenges

Forecasting currency prices is difficult, especially when the exchange rate is in a middle range. For example, in 2024, economists predicted AUD would rise from 0.67 to 0.70 USD by year-end, but the actual average traded price fell below 0.62 USD, with monthly averages around 0.63 and annual lows of 0.61.

In 2025, forecasts suggest AUD may continue weakening, targeting around 0.65 USD in June and 0.67 USD in December, but few expect it to fall below 0.62 USD mid-year.

AUD and USDX relationship

Long-term charts show a clear correlation: when the US dollar index (DXY) strengthens, AUD tends to weaken. During the tech bubble in 2000, AUD tested 0.485 USD; during commodity booms in late 2011 and China’s growth, it rose to 1.10 USD. Historically, during the floating rate era, the average AUD/USD was about 0.75 USD, though it rarely stays at that level.

Factors likely to keep USD strong and AUD weak in 2025

• US tariffs proposed by President Trump could weaken China’s economy, reducing demand for Australian exports.
• The Fed’s interest rates are unlikely to cut quickly, while RBA may ease policy, narrowing rate differentials and pressuring AUD.
• US technological advances, especially AI, strengthen USD’s structural position, attracting investors.

Given these factors, it’s plausible that AUD/USD could dip below 0.60 USD in the first half of 2025, especially if the US dollar remains strong.

How to trade AUDUSD effectively

Successful forex trading requires deep understanding of fundamental and technical analysis. AUDUSD offers opportunities in both bullish and bearish markets.

Advantages of trading AUDUSD:

• High liquidity for easy execution
• Narrow spreads reduce trading costs
• Moderate volatility suitable for various strategies
• Abundant analysis tools and indicators
• Leverage options to amplify gains

Currently, AUDUSD trades around 0.66362, with daily movements, volatility, and trend data available. Key info includes daily high/low, weekly changes, annual performance, and 52-week extremes.

Important info for traders:

• Support and resistance levels
• Recent trend direction
• Entry and exit points
• Risk management parameters

Trading AUDUSD on suitable platforms

The popularity of AUDUSD trading has led to many platforms offering services. Choose a platform that:

• Is regulated and trustworthy
• Offers tight spreads and low commissions
• Provides advanced charting and analysis tools
• Supports mobile and desktop trading
• Regularly updates features
• Has responsive customer support

Features to look for:

• User-friendly interface
• Zero-commission, low-spread trading
• CFD options for flexibility
• Free demo accounts for practice
• Mobile trading apps

Summary: Why is AUD/USD important for investors?

AUD reflects Australia’s economic health, heavily reliant on commodity exports. When commodity prices rise, AUD appreciates; when they fall, AUD weakens. The US dollar, as a global reserve currency, often moves inversely to AUD, especially during economic shifts.

AUDUSD (“Aussie”) remains one of the most liquid and traded currency pairs, favored for its narrow spreads, moderate volatility, and responsiveness to economic fundamentals.

To trade AUDUSD successfully, traders should:

1. Understand what drives AUD’s value
2. Follow economic data from Australia, China, and the US
3. Choose optimal trading sessions
4. Use quality analysis tools
5. Practice disciplined risk management

Given the evolving forex landscape and AUD/USD’s commodity currency nature, traders with deep knowledge and strategic discipline can maximize profit opportunities in both short-term and long-term trading.