Currency Trading Australia

If you are interested in currency trading Australia keep in mind that there are some factors that impact the price of the Australian dollar. It does not matter whether or not you live in Oz, you still may want to trade this currency from time to time. It can have benefits because the Australian dollar sometimes stays more stable when other major currencies are very volatile. This is partly because of its position as a commodity currency.

Commodity currencies are the currencies of countries whose main exports are in raw materials rather than manufactured goods or services. Raw materials can include food and other agricultural products, iron and other metals, gem stones, oil, etc. In Australia, the main commodity export is gold.

When the average consumer thinks of gold they usually equate it with jewelry. However, in the world of investments, gold is bought and sold more for its commodity value than for use. Gold is something that often preserves its value in times of economic crisis. For example if there is rampant inflation or a major stock market crash, the average person’s savings will often become almost worthless but an investment held in gold will maintain or more likely increase its value.

Australia is one of the world’s largest sources of mined gold. Production levels have fluctuated a little due to the effect of internal taxation but broadly speaking, Australian gold production has risen from just 20 tonnes a year in the late 1970s to around 300 tonnes a year today.

Because of this, there is a close correlation between the price of gold and the value of the Australian dollar. Interestingly, even though the USA is another major source of gold, even producing slightly more than Australia, the price of the AUD/USD currency pair is also closely correlated with the price of gold, other things being equal. This is because gold is not such an important factor in the huge American economy as it is in Australia.

So when gold prices rise, the price of AUD/USD will often also rise, and when gold falls AUD/USD is likely to fall. Often there is a little delay before the currency price reacts so a foreign exchange trader involved in AUD/USD has the opportunity to use this to his advantage.

You can also expect that commodity prices in general and gold in particular will go up when there is any major economic crisis in the world. Provided that Australia is not too closely involved in a crash, that is often another early indication of an upcoming rise in the price of AUD/USD.

Of course, gold is not the only factor here and if you want to trade AUD/USD you will need to stay informed about anything else that might affect the price. You can never completely remove the risk involved in forex trading. However, understanding the influence of gold prices on the Australian dollar will be of benefit to you if you want to make money from currency trading Australia.

Weaker Oil, Stronger Dollar

Metals are beginning the new trading week on a lower note reflecting weaker Oil, stronger Dollar, and in reaction to talks of the International Monetary Fund (IMF) selling Gold. Talks of the IMF selling Gold occurs like clockwork every year.

Stock an metals traders are also standing on the sidelines in advance of today’s Leading Economic indicators report. With that said we find silver 30 cents lower at $16.73. Gold is $11.00 lower at $997.00 per ounce. Palladium remains unchanged at $299.00. Platinum is $1310.00 off $10.00.

Over in the currency markets the Euro slipped 53/100ths of U.S cent to $1.4662. Energy traders are facing lower Oil this morning with the last trade at $70.53 down $1.51 per barrel. Oil gained $2.75 for the whole of last week.

In the stock market the Dow is indicating a 44 point lower open after last week’s total gain of 214 points. Traders are once again showing signs of worry regarding the extent of the stock markets run up relative to the underlying economic fundamentals. The question looming is; are we getting ahead of ourselves? While today’s Leading Economic Indicators are pointing to a rise of .7% compared to the prior reading of up .6%, traders are not so sure that the next 6 months will continue to show economic improvement.

In world matters President Obama is signaling yet another military strategy shift. In a TV interview the President voiced skepticism that more troops in Afghanistan would make a difference. Up until now the military officials expected a rubber stamp endorsement for added troops by the administration.

Today’s economic calendar:

Canadian Retail Sales

Dollar Continues to Weaken on Inflationary Worries

Markets continued to strengthen in overnight activity in the wake of Ben Bernanke’s words of assurance that the recession appears to be behind us. His assurance was later confirmed by legendary investor Warren Buffet. (hmmm)

The Dollar continues to weaken on inflationary worries with traders holding their breath in advance of this morning’s Consumer Price Index report. Currency and metals traders are still thinking about yesterday’s surprise surge in the Producer Price Index. Wall Street expects the Consumer Price Index (CPI) to clock in with a rise of .3% versus last month’s reading of 0%. Traders are whispering the rise might be higher than the estimate. Last on the Euro $1.4679 up 44/100ths of U.S cent.

As we look overseas we find Silver up another 40 cents at $17.30. Gold is $12.00 higher at $1016.00. Palladium is $296.00 up $6.00. Platinum is $10.00 higher and changing hands at $1335.00.

Over in the energy markets we find Oil trading flat to a shade lower in advance of today’s Weekly Inventories. The estimate calls for a decline of 3 million barrels, but traders are taking no chances given the recent surge in the price of Oil.

Over in the stock market the Dow ended yesterday with a gain of 56 points and appears to be headed for another opening gain of 46 points. Today’s economic calendar also contains the latest look at U.S. Industrial Production where stock traders expect to see a rise of .6% compared to last month’s rise of .5%. In world matters Chinese officials indicated that they are pushing for a quick negotiated solution to the tire trade spat with the U.S.

Today’s economic calendar:

U.S. Consumer Prices
U.S. Current Account
U.S. Industrial Production
EZ Consumer Prices
U.K. Employment

Conflicting Beige Book Report

Stocks appear to be taking a breather this morning after yesterday’s 49 point gain in the Dow Jones Industrial Average. Traders are playing close to the vest after having had time to dissect yesterday’s Fed Beige Book where we got conflicting snippets like, retail sales are flat, loan demand continues to be weak, slight improvement in residential real estate, commercial real estate is weak, but overall economic activity seems to be stabilizing.

Traders are also standing pat in advance of this morning’s economic data where the Weekly Initial Jobless Claims are estimated to clock in at 560,000 versus last week’s 570,000. The July Balance of Trade is expected to show a deficit of $27.3 billion compared to June’s $27 billion. Given the recent precipitous decline in the value of our Dollar you might expect to see the next two reports show a significant easing in the deficit. Remember a weaker Dollar makes our exports more attractive to overseas buyers.

As for the Dow it appears to be headed for a 13 point lower open. The Euro eased to $1.4522 down a third of a U.S cent. Crude appears to be defying the stronger Dollar with traders awaiting today’s Weekly Oil Inventories where the latest estimate calls for a 1.8 million barrel decline in available Oil supplies, and a 1.5 million barrel drop in Gasoline. Last trade on Crude $71.68 up 37 cents.

As for the metals we find them flat to lower with Silver trading at $16.11 off 34 cents. Gold is $4.00 lower at $985.00. Palladium is $292.00 up $2.00. Platinum is off $5.00 and changing hands at $1279.00.

In other matters; President Obama laid out his new Health Care proposal in a one hour speech last night in front of the full Congress and the nation. While most agree that he did a masterful selling job; initial reaction shows no softening along party lines.

Today’s economic calendar:

BANK OF ENGLAND Rate Decision (volatile market event)
U.S. Initial Claims
U.S. Trade Balance
BANK OF CANADA Rate Decision (volatile market event)

Markets Quiet Awaiting Fed Beige Book Later Today

In the forex market we find the Dollar listless after slumping to yearly lows. Last trade on the Euro $1.4503 off 1/100ths of U.S cent. Crude Oil is down 11 cents at $70.99. Traders are not quite sure what to expect when the Vienna OPEC Meeting kicks off today. Unfortunately the estimates for this week’s Oil Inventories are not currently available.

Markets appear to be quietly drifting in advance of this afternoon’s release of the Fed Beige Book. The Beige Book is an anecdotal collection of business conditions throughout the Federal Reserve districts. It is how the Fed gets the pulse of American Business. Since the report does not hit the tape until 2pm eastern; traders will have little to sink their teeth into for market direction before then.

Traders will once again be glued to the Dollar markets and Oil for guidance. As for the metals; they are also drifting with Silver down 7 cents at $16.35. Gold is $2.00 lower with the last European trade at $995.00. Palladium remains unchanged at $292.00. Platinum is $1283.00 up $3.00 per ounce.

Over in the stock market the Dow ended Tuesday with a 56 point gain but looks 4 points lower this morning. In other matters; President Obama will hold a nationally televised speech tonight where he will once again make his case for health care reform including the the contentious public government option.

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