HOW TO TRADE FOREX: AUSTRALIAN DOLLAR/CANADIAN DOLLAR (AUDCAD)
The AUD/CAD cross is a fascinating narrative of two economies deeply influenced by their natural resources and global trade. Australia, with its economy driven by the export of commodities like iron and coal to Asia, and Canada, a giant in oil and forest product exports, create a currency pair whose value is closely linked to the fluctuations of global commodity markets. Successfully trading AUD/CAD requires a keen understanding of these markets and the internal economic factors of both countries, from their central banks' policies to employment reports and economic growth.
The dynamics between the Australian and Canadian dollars can offer early signals of changes in global commodities markets, making this pair a thermometer for global economic trends. Moreover, traders must pay attention to geopolitical and economic factors in Asia and the United States, as both significantly impact the Australian and Canadian economies, respectively. Technical analysis and a solid understanding of these elements can reveal trading opportunities in times of volatility or shifts in commodities trends.
Top 10 Factors Affecting the Australian Dollar - Canadian Dollar Pair
Interest Rate Differentials: Monetary policy decisions by the Reserve Bank of Australia (RBA) and the Bank of Canada can significantly influence this pair, affecting investment flows.
Commodity Prices: Both economies are exporters of natural resources. Changes in oil prices impact the CAD, while the prices of iron and other minerals influence the AUD.
Key Economic Data: Reports on GDP growth, inflation, employment, and retail sales in both countries can move the pair.
Global Trade Tensions: Since both countries have export-oriented economies, trade tensions, especially with China and the US, can affect the AUD/CAD.
Domestic Policy: Elections and changes in fiscal or public spending policies can significantly affect confidence and, therefore, the currencies.
Capital Flows: Foreign direct investment and capital movements to and from Australia and Canada can influence the demand for both currencies.
Market Sentiment and Risk Aversion: The AUD is considered a higher-risk currency, while the CAD can be seen as more stable, affecting their performance in times of uncertainty.
Weather Conditions: Extreme weather events can impact Australia's agricultural and mining industries and oil production in Canada.
Central Bank Interventions: Both the RBA and the Bank of Canada can intervene in the forex markets to influence the value of their currencies.
Performance of Trade Partners: The economic health of major trading partners, like China for Australia and the United States for Canada, can affect the demand for exports and, therefore, the currencies.
Related Assets Influencing the Dynamics of the AUD/CAD Pair (Those You Should Monitor)
Brent Oil Price: This is important for the CAD, as Canada is a major oil exporter.
Metal Prices (Iron, Copper): Crucial for the AUD, given Australia is a significant exporter of these resources.
Australian Stock Indices (ASX 200): Reflects the economic health of Australia; an overall increase generally favours the AUD.
Canadian Stock Indices (S&P/TSX Composite): Indicator of the Canadian economy; its strengthening can boost the CAD.
Top FX Trading Apps
Opening a FX Trading Account
Select a Reliable Broker: Research and choose a broker that meets your expectations regarding trading tools. The security of your funds should be your priority.
Registration: Go to the broker's website and find the option to register a new account. You will need to provide basic personal information, such as name, email address, phone number, and, in some cases, an ID document to verify your identity.
Account Verification: Brokers require a verification process to comply with anti-money laundering regulations. This usually involves uploading documents such as a photo ID and proof of address.
Initial Deposit: You can make your first deposit once your account is verified. Brokers offer different payment methods, including bank transfers, credit/debit cards, electronic payment systems, and even cryptocurrencies. Returning to point 1, if you have specific needs like "I can only use brokers that accept payment method XYZ, " choose the broker that fits your needs.
Trading Platform: With your account funded, you can now access the broker's platform. If you haven't already, now is the time to familiarise yourself with the platform. Take advantage of the demo account if it's available. It allows you to practice your trading strategies, an advantage not only for beginners but also for experienced traders who are testing new strategies or simply seeing the execution and advanced features the trading app offers.
Set Up Your Trading Space: Customize the platform according to your preferences. This includes selecting the financial instruments you plan to trade, setting up charts, and implementing any technical indicators you regularly use.
Trading Strategy: If you haven't already, define your trading strategy, including risk management. Setting loss limits and profit targets can help you keep your trading disciplined and focused on your long-term goals.
First Trades: With everything in place, you can start trading.
BlackBull Markets, founded in 2014 by Michael Walker and Selwyn Loekman in Auckland, New Zealand, has emerged as a trusted and regulated ECN broker offering access to diverse tradable instruments. BlackBull Markets stands out with its three distinct types of ECN accounts, catering to traders' varying needs and preferences: Standard Account, Prime Account, and Institutional Account.
The Standard Account is an excellent choice for traders seeking a cost-effective forex experience. It offers a convenient entry point without minimum deposit requirements and commission-free trading. Traders can access all tradeable instruments and utilize user-friendly trading platforms, including PC, Mac, mobile, and Webtrader.
The Prime Account provides a competitive edge for those looking to maximize their trading potential. With spreads as low as 0.1 pips and a commission of $6 per lot for most currency pairs, traders can benefit from tighter spreads and lower costs. The Prime Account requires a minimum initial deposit of 2000 USD and offers leverage of up to 1:500, along with micro lots for precise position sizing.
BlackBull Markets also caters to larger traders with its Institutional Account, providing a truly institutional trading experience. With a minimum initial deposit of 20,000 USD, traders can access customisable commission structures, 24/7 dedicated technical support, and a customised MAM/PAMM platform. Qualifying traders can benefit from free VPS access based on trading volume.
Regulation is key to BlackBull Markets' offering, ensuring a secure and transparent trading environment. Prominent authorities regulate the broker, including the Financial Services Commission of New Zealand (FSPR).
With a commitment to exceptional financial services and a focus on client satisfaction, BlackBull Markets has garnered a strong reputation within the industry. Their comprehensive range of over 26,000 tradable instruments, competitive trading conditions, and reliable customer support positions them as a top choice for traders seeking a trusted ECN broker.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.
