Aussie dollar trading characteristics

Of the so-called group of forex “majors,” the Australian dollar is
the fifth most actively traded currency behind the U.S dollar, the euro, the Japanese yen, and the British pound. The current fundamentals driving Australian dollar price action include exposure to Asian economies, commodity price cycles,
and the carry trade, in this case referring to traders borrowing money in Japan and investing in Australian fixed-income instruments to exploit the interest-rate differential between the two countries.

To find the Aussie dollar’s unique characteristics, we reviewed daily data for the AUD/USD pair from April 3, 2006 through March 30, 2007 (259 trading days). Specifically, four aspects of price behavior are quantified: the daily range, the daily closeto- close changes, the lows for days that closed up, and the highs for days that closed down. These figures are complemented by intraday analysis of 60-minute bars from Feb. 1 through March 30, 2007 to identify the most volatile periods during the 24-hour forex trading session.

Figure 1 is a daily bar chart of the analysis period. In March 2006 the AUD/USD pair fell almost to 0.7000 before swinging higher to eventually eclipse 0.7900 in November 2006. After that, price chopped up and down for the better part of three months before dropping below 0.7700 in early March 2007. It then promptly rocketed more than 9 percent from the March 6 low of 0.7678 to the April 19 high of 0.8395 — a level it has not reached since February 1989 (a little more than 18 years).