If you’re interested in commodities trading, the best way to start is with the Australian Dollar (AUD) and the US Dollar (USD). The two are often thought of as being the most widely used in international business. However, they also represent quite a bit of competition from other currencies. The two currencies are so similar that most traders don’t tend to think about another currency being used as a parallel to the Australian Dollar. When you do, you’ll likely see that the Australian Dollar is often stronger than the US Dollar and that the strength of the Australian Dollar is mirrored in the strength of the US Dollar – they are both strong when compared with most major world currencies.
AUDUSD, or the ‘AUSD’ the currency quote currency, tells the investor how much one US dollar will be worth (this is the base rate for the exchange rate between the two currencies). The US Dollar is the base currency for all of the countries around the World. This means that if you were to convert the Australian Dollar into the US Dollar using an international financial exchange broker, it would have the same effect as exchanging the Australian Dollar for the US Dollar – it would become identical. This is why most Australian investment and trading firms will advise their clients to use the AUSD instead of the US Dollar. The AUSD has one of the lowest spreads to the traded products in the world, which makes it a great choice for traders and investors who are interested in the largest possible daily exposure to the main markets and sectors.
The Euro against the AUSD is relatively weak, which means that the Euro’s increase on the AUSD has a far reaching impact on the AUSD. This is due to the fact that Australia’s export base is based around the commodity and services industries, where the Euro and the US Dollar are far more important (and thus, based around the commodity and services industries, where the Euro and the US Dollar are far more important). The weakness in the Euro against the AUSD is what makes the Euro a much more attractive investment and trading product for European investors and traders. In particular, the recent problems in Europe (and the potential for more problems to come) have made many people (both Europeans and Asians) want to convert their money into AUSDs (that is, convert their currencies into the Euro). If you are an Asian investor looking to invest in the Middle East, the strength of the Euro makes it a potentially great investment.
However, the strength of the Euro is not solely a European issue. In recent years, Australia has seen an increase in the purchase of the major currencies of the US Dollar (i.e. the AUDUSD), the Australian Dollar (the USD/AUSD), the British Pound (the GBP/USD), the Japanese Yen (JPY/USD), and the Euro (EUR/ AUDUSD). This trend has continued until recently, with the Euro has been particularly strong against most of its major competitors. Now, we will look at why the Euro is so ‘compelling’ to the rest of the world.
The first reason the Euro is so compelling is simple – in most cases, when you are talking about commodity currencies, the Euro is significantly more valuable than the United States Dollar. This means that when the Euro is compared against the US Dollar in international markets, the Euro always ends up ahead. Now, this is not always the case – as commodity currencies usually track the strength or weakness of the US Dollar. However, for the vast majority of cases, you are better off dealing in Euros over the US Dollar. The Euro is thus a much more powerful trading currency – in comparison to the relatively weak US Dollar.
Additionally, there are many long-term advantages associated with trading the Euro over the US Dollar. For example, most technical analysis indicates that there is usually a large and consistent tendency for the Euro to eventually break out of its current major deficit. This means that it is often necessary for more investors to hold onto their money for some time, until this new trend can materialize. However, there is no way that the Euro can become the overwhelming power that it currently is until it breaks out of its current economic crisis (i.e., the Eurozone is in an economic crisis with deep financial problems).
Now, the second reason that the Euro is so appealing to investors is that compared to the US Dollar, the Euro is much more flexible. As a result, you can trade the Euro against the AUSD or other major currencies without having to completely write off your investment in Australia. In fact, you can even use the Euro as a tool to make your investment more diversified – simply diversify between stocks, bonds, commodities, and/or cash. As a result, the combination of flexibility and diversity makes the Euro a very attractive trading currency.
If you have limited capital and you want to take advantage of the cheaper exchange rate between the Euro and the US Dollar, then you should definitely consider trading the AUDUSD. The Euro is typically about half (about one-half) the cost of the Canadian dollar. This means that you can profit from the Australian Dollar’s strength while you reduce your risk by switching from the US Dollar to the Euro. As a result, trading the Euro against the AUSD can provide you with a low risk, high return investment vehicle – especially if you are already trading the AUSD in the other direction!