Forex Walkthrough

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.)



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