Important Economic Indicators for Australia.

Consumer Price Index – Because the RBA’s primary goal is controlling inflation, the CPI, which measures the overall change in the price of consumer goods and services, is closely watched by the bank.

Balance of Trade – Australia has an extremely robust trade sector so currency traders and bank officials alike tend to watch changes in the country’s export and import levels.

Gross Domestic Product – This measures how well Australia’s economy is doing.

Positive readings indicate economic growth while negative readings mean economic contraction.

Unemployment Rate – The unemployment rate tracks how many people in Australia’s labor force are out of work.

The number of people employed, or rather, unemployed in this cause, has a high correlation with economic activity.

A person without a job means he has less money available for spending.

What Moves the AUD

Economic and Interest Rate Outlook

The AUD is greatly affected by macroeconomic factors such as monetary policy rhetoric, interest rates, and domestic economic data.

When trading AUD, always pay special attention to the interest rate outlook.

Comments made by officials from the RBA regarding interest rates, for instance, could create a hefty impact on the AUD.

China’s Economy

For the better part of the last decade, China has been on a roll, posting some massive growth figures.

In order to create finished goods, China sources a lot of its raw materials like coal and iron ore, from Australia.

For China to buy raw materials from Australia, it must first need to exchange its local currency for the AUD.

This means that increased demand for Chinese goods tends to prop up the AUD’s value.

Likewise, a decline in demand for Chinese products could lead to a fall in the AUD’s value.

New Zealand Data

To a lesser extent, data from New Zealand influences the AUD’s price action.

Take note that New Zealand’s economy is very similar to Australia, which makes their currency positively correlated.

In fact, the relationship of the two countries is sometimes described as “Trans-Tasman” to show how closely tied their economies are and to indicate the existence of the Tasman Sea sitting right between them.

With that said, it is important to be aware of important upcoming data from New Zealand as it could indirectly cause the AUD to move.

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