Forex Walkthrough

AAA

Level 5 Economics - Australian/New Zealand Dollar

Australian/New Zealand Dollar (AUD/NZD)
Central Bank: Reserve Bank of Australia / Reserve Bank of New Zealand (RBA/RBNZ)
Current Interest Rate: http://www.rba.gov.au/ and http://www.rbnz.govt.nz/

A Popular Carry
Offering one of the highest interest rates in the major global markets, the Reserve Bank of Australia has always maintained its stance of price stability and economic strength as cornerstones of its long-term plan. Headed by the governor, the Australian bank's board is made up of six at-large-members, along with a deputy governor and a secretary of the Treasury. Jointly, they work toward an inflation target of between 2-3%, while meeting nine times throughout the year. In addition, the Reserve Bank of New Zealand looks to promote inflation targeting in the hope of maintaining a foundation for prices.

Both of these currencies have become a focus of carry traders, as the Australian and New Zealand dollars (AUD and NZD) tend to offer the highest yields of the major currencies available on most platforms. Consequently, volatility can be experienced in these pairs if a deleveraging effect takes place. Usually however, the currencies tend to trade in similar averages of 30-40 pips, like the other majors. Both currencies also maintain strong relationships with commodities, most notably gold and silver. (Read more about carry trades and the AUD in Turn To The Carry – A Different Flavor Of The Setup.)

South African Rand


Related Articles
  1. Forex Education

    Top 8 Most Tradable Currencies

    Currencies can provide diversification for a portfolio that's in a rut. Find out which ones you need to know.
  2. Forex Education

    Forex Currencies: Commodity Pairs (USD/CAD, USD/AUD, USD/NZD)

    By Brian PerryThe commodity currencies are currencies from countries that possess large quantities of commodities or other natural resources. Natural resources often constitute the majority of ...
  3. Options & Futures

    Bond Spreads: A Leading Indicator For Forex

    Here we examine some telling patterns in the relation between countries' interest rates and their currency pairs.
  4. Economics

    Canada And Australia Dollars To Be Reserve Currencies

    The IMF upgrading the Canadian and Australian dollars to "official" reserve currency status is a recognition of reality.
  5. Forex Education

    Forex Currencies: Conclusion

    By Brian Perry Conclusion The currency markets are the largest and most actively traded financial markets in the world with daily trading volume of more than $3 trillion (Triennial Central ...
  6. Forex Education

    How Inflation-Fighting Techniques Affect The Currency Market

    Central banks use these strategies to calm inflation, but they can also provide longer-term clues for forex traders.
  7. Economics

    A Primer On Reserve Currencies

    For nearly a century, the U.S. dollar has served as the world's premier reserve currency, but the future is uncertain.
  8. Forex Education

    6 Currencies With A Bright Future

    Have a rewarding new year by investing in these currencies.
  9. Investing

    Will the Yuan Become an International Reserve Currency?

    Although still a matter of when, China is likely to reach a significant milestone when the International Monetary Fund decides to include the Chinese yuan in its special drawing rights basket ...
  10. Economics

    What Do the Federal Reserve Banks Do?

    These 12 regional banks are involved with four general tasks: formulate monetary policy, supervise financial institutions, facilitate government policy and provide payment services.
RELATED TERMS
  1. Reserve Bank Of New Zealand

    The Reserve Bank of New Zealand is New Zealand's central bank ...
  2. NZD (New Zealand Dollar)

    The currency abbreviation or currency symbol for the New Zealand ...
  3. NZD/USD (New Zealand Dollar/U.S. ...

    The abbreviation for the New Zealand dollar and U.S. dollar (NZD/USD) ...
  4. Net Interest Rate Differential

    In international markets, the difference in the interest rates ...
  5. AUD (Australian Dollar)

    The currency abbreviation for the Australian dollar (AUD), the ...
  6. Kiwi

    A slang term for the New Zealand dollar (NZD). It derives its ...
RELATED FAQS
  1. What is the name of the currency in New Zealand?

    The New Zealand currency is known as the New Zealand dollar. The currency was decimalized in 1967, and divided into 100 parts ... Read Answer >>
  2. How do central banks acquire currency reserves and how much are they required to ...

    A currency reserve is a currency that is held in large amounts by governments and other institutions as part of their foreign ... Read Answer >>
  3. In forex, what are the commodity pairs?

    In forex, the commodity pairs consist of the heavily-traded currency pairs and contain the Canadian, Australian and New Zealand ... Read Answer >>
  4. Which nations' economies have reserve ratios?

    Learn more about the inconsistent imposition of depository banking reserve ratios, and why the United States stands alone ... Read Answer >>
  5. Why would the Federal Reserve change the reserve ratio?

    Understand the Federal Reserve's monetary policy and the tools it uses to change that monetary policy. Learn about the reserve ... Read Answer >>
  6. Who decides when to print money in India?

    Find out the role of the Reserve Bank of India, or RBI, and the amount of authority given to the government. Learn who is ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center