How can You trade the AUD/NZD?
What factors influence the AUD/NZD?
Given Australia and New Zealand’s status as export-driven economies, their top priorities are keeping inflation low, prices stable, and interest rates high. This makes these currencies’ relationship with one another more susceptible to the influence of local economic events than to trends on the global market.
The Australian dollar’s market value is affected by weather cycles, harvest, mining output, and the volatility of metal’s market prices due to its heavy reliance on commodities such grains and metals. The New Zealand dollar, however, relies on the strength of the export of machinery, dairy products, wool, and wood products despite its becoming a more industrialized, free market economy.
The Australian and New Zealand dollars’ popularity as a carry trade further causes a disproportionate impact on each of the currencies, as traders speculate about each country’s interest rate movements.
What to consider when trading the AUD/NZD?
First, this is an extremely liquid market, so it is unlikely that buyers and sellers will find themselves facing a short supply.
In addition, the Reserve Bank of New Zealand has staged a number of interventions to drive down the value of the NZD to ensure an overvalued currency would not hurt their trading relationships with other countries. This has taken away some of the New Zealand’s volatility, especially in its swings against the Australian dollar.
Did you know?
Also commonly known as the Kiwi, this currency was named after New Zealand extinct indigenous bird which is displayed on the coin. Kiwis are small flightless birds and are also the smallest living ratites, roughly the size of a domestic chicken.
The bird is a well known icon of New Zealand, and the locals are often referred to as kiwis, as well.