AUD/USD Trading Guide: China, Commodities and the RBA
AUD/USD trading explained: how China, iron ore, the RBA and risk mood move the Aussie, when it is active, what a pip is worth and how to size trades.
The Australian dollar often moves before Australia has said anything. A steel survey in China, a slide in Asian share markets or a hot US jobs report can push it around while Sydney is asleep. That is what makes AUD/USD trading interesting, and why reading only Australian news leaves you guessing.
Quick answer: AUD/USD is the price of one Australian dollar in US dollars, nicknamed the Aussie. It moves on the gap between Reserve Bank of Australia and Federal Reserve rates, on Chinese demand for iron ore, and on global risk mood. It is active in Asian hours as well as the London–New York overlap.
What is AUD/USD? The Aussie dollar in plain English
AUD/USD is the exchange rate between the Australian dollar and the US dollar. The Australian dollar is the base currency, the thing you are buying or selling, and the US dollar is the quote currency, the unit the price is counted in. A price of 0.6600 means one Australian dollar costs 66 US cents. When the number goes up, the Aussie is gaining; when it goes down, the US dollar is gaining.
“Aussie” is the market’s nickname for both the currency and the pair, so “the Aussie is weaker” and “AUD/USD is down” mean the same thing. Unlike EUR/USD and GBP/USD, the pair usually trades below 1.0000, because one Australian dollar has been worth less than one US dollar for most of the time since Australia floated its currency in December 1983. It did climb above parity for long stretches of 2011, at the height of a mining investment boom.
The Australian dollar is one of the most traded currencies in the world, and AUD/USD sits comfortably among the major pairs in the Bank for International Settlements’ three-yearly survey of global turnover. That is a lot of trading for an economy of Australia’s size, partly because investors use the Aussie as a liquid way to express a view on China, commodities and global growth.
AUD/USD is a commodity currency pair: Australia earns a large share of its income from exporting raw materials, especially iron ore, coal, natural gas and gold, and most of its iron ore goes to China. So the Aussie behaves less like a verdict on Australia alone and more like a reading of how hungry the world, and China in particular, is for what Australia digs up.
Five forces act on any currency, but for the Aussie the weightings are unusual. Tap each one in the map below, paying attention to trade and commodities and to risk sentiment.
▲ Higher rates
▼ Lower rates
Higher interest rates attract foreign money seeking better returns, which must be converted into the currency first. Rate expectations are the single biggest driver of major currencies.
The five forces that move the Australian dollar. For AUD, trade and commodities and risk sentiment carry more weight than for most majors, alongside the interest-rate story every currency shares.
If base and quote currencies are new to you, the Academy lesson on currency pairs and quotes explains them step by step.
AUD/USD pip value and spreads
A pip on AUD/USD is the fourth decimal place, 0.0001, which is one hundredth of a US cent. A move from 0.6600 to 0.6650 is 50 pips. Because the US dollar is the quote currency, the value of each pip is fixed in dollars whatever the exchange rate:
| Lot size | Australian dollars traded | Value of one pip |
|---|---|---|
| Standard lot | 100,000 | $10 |
| Mini lot | 10,000 | $1 |
| Micro lot | 1,000 | $0.10 |
So the AUD/USD pip value is the same $10 per standard lot you get on EUR/USD and GBP/USD. What differs is the size of the position behind that pip. A standard lot of Australian dollars is worth only about $66,000 at a price of 0.6600, against roughly $108,500 for a lot of euros at 1.0850. The same 1% move in each currency therefore covers far fewer pips on AUD/USD.
Stop distances and daily ranges quoted for EUR/USD do not translate one for one. A 30-pip stop on the Aussie is a wider stop, in percentage terms, than a 30-pip stop on the euro. Our guide to what a pip is in forex covers the arithmetic for every type of pair, and the lesson on pips and lots explains the three lot sizes.
AUD/USD spreads
The spread, the gap between the bid and the ask, is usually tight on AUD/USD because it is a liquid major, though often a touch wider than on EUR/USD. It widens at three predictable times: around the daily rollover late in the US evening, in the minutes either side of a big Australian, Chinese or US release, and at the Monday open, when Sydney is the first centre to start trading after the weekend and liquidity is at its thinnest. Our guide to forex trading costs shows how spreads, commission and overnight swap add up.
What moves AUD/USD: China and iron ore
Start with the customer. China is Australia’s largest trading partner, and Australia is the world’s largest exporter of iron ore, the raw material for steel. When Chinese steel mills are busy, often because property and infrastructure building is strong, they need more ore. More demand lifts the iron ore price, Australia earns more for every tonne it ships, and foreign buyers need more Australian dollars to pay for it. Economists call the underlying idea the terms of trade: the price of what a country sells abroad compared with the price of what it buys.
In practice, that means Chinese data can move AUD/USD as much as some Australian releases. The ones traders watch most are:
- Chinese manufacturing surveys (PMIs). The official survey is published at the end of each month, and readings above 50 point to expansion. They are an early read on factory demand, including steel.
- The monthly activity batch. Industrial production, retail sales and fixed-asset investment usually land together around the middle of the month, giving a broad picture of building and spending.
- Trade figures. Chinese imports of iron ore and other raw materials show directly how much Australia’s biggest customer is buying.
- Quarterly GDP and credit data. Slower growth and weaker lending tend to weigh on the Aussie; signs of stimulus tend to support it.
All of these are published during the Asian trading day, which is one reason AUD/USD has more to react to in Asian hours than most majors do.
The chain is loose, though. Iron ore can rise because of a supply problem at a mine rather than stronger demand, which helps Australia much less, and the link between AUD and any single commodity has broken for months at a time. Our guide to commodity currencies explains the terms-of-trade mechanism across CAD, AUD, NZD and NOK, and the Academy lesson on commodities and currency correlations shows how to use these links without leaning on them.
The RBA, the Fed and the rate gap
Commodities set the mood music, but over months the steadiest current under AUD/USD is the gap between Australian and US interest rates. Each central bank sets a policy interest rate, and money tends to drift towards the currency that pays more, or is expected to pay more soon.
In Australia that bank is the Reserve Bank of Australia, usually just called the RBA. Its Monetary Policy Board sets the cash rate with a target of keeping inflation between 2% and 3%, alongside full employment. Since 2024 it has met eight times a year, announcing each decision at 2:30 pm Sydney time with a press conference an hour later. That is the early hours of the morning in London and the evening before in New York, so many European and American traders wake up to the reaction rather than watching it. Four times a year the decision arrives with the Statement on Monetary Policy, the Bank’s updated forecasts, which can matter as much as the rate itself.
On the other side sits the Federal Reserve, whose decisions land in the US afternoon. The pair responds to the balance between the two: an RBA that is more hawkish than the market expected tends to lift AUD/USD, and a Fed that is more hawkish than expected tends to push it down.
The history explains why the gap gets so much attention. For much of the 2000s and early 2010s, Australian rates sat well above US rates, and the Aussie became a favourite carry trade currency: investors borrowed in low-yielding currencies and held Australian dollars to earn the difference. By March 2008 the RBA’s cash rate was 7.25%, while the Fed was cutting US rates towards 2%. That gap pulled in a great deal of money, and it left the Aussie exposed when those positions were unwound in a hurry later that year. Our guide to the carry trade explains how that build-up and unwind works.
Three habits follow for AUD/USD trading:
Trade the surprise, not the decision. By meeting day the expected outcome is usually priced in. What moves the pair is a decision, a forecast or a press-conference answer that differs from what was expected.
Watch the data the RBA watches. The Australian Bureau of Statistics publishes its main releases at 11:30 am Canberra time. The monthly labour force survey and the inflation figures, especially the trimmed mean measure the RBA pays close attention to, are usually the most market-moving. Wage growth and quarterly GDP matter too.
Remember the US half. A Fed surprise reprices the dollar against everything, and AUD/USD moves with it. Our guide on how interest rates affect currency prices walks through the full chain, and the lesson on central banks and interest rates shows how policy statements are read.
Risk sentiment and US data: the Aussie’s other engines
If China is the customer and the RBA is the thermostat, global risk mood is the weather. On calm, confident days, often called risk-on, investors buy shares, commodities and higher-yielding currencies, and the Aussie tends to rise. On fearful days they sell all of those and buy safe havens, including the US dollar, so AUD/USD can fall sharply even with no Australian or Chinese news at all. Switch the mood below to see where the Aussie sits.
Tap a currency to see why it behaves this way.
Risk-on and risk-off. The Australian dollar sits at the risk-seeking end of the majors and the US dollar at the safe-haven end, so a change in mood pushes AUD/USD harder than it pushes most dollar pairs.
Because both forces line up on the same side, AUD/USD is one of the clearest risk barometers among the majors. In a panic the Aussie is sold and the dollar is bought. The 2008 financial crisis showed how far that can go: AUD/USD fell from close to 0.98 in July 2008 to around 0.60 by late October, a drop of more than a third in about three months, as risk appetite collapsed, commodity prices fell and carry trades were unwound at the same time.
You do not need a crisis to see the effect: on an ordinary day, a sharp fall in share markets often shows up on the Aussie within minutes. Our guide to risk-on and risk-off explains how to read the mood, and the lesson on risk-on and risk-off sorts every major currency by how it behaves.
US data
Half of AUD/USD is the US dollar, so the big US releases matter here as much as anywhere. The monthly jobs report, known as non-farm payrolls, and the US consumer price index both come out at 8:30 am New York time. A strong US surprise tends to lift the dollar and push AUD/USD down; a weak one tends to do the opposite. Because these numbers also shift expectations for global growth and risk mood, the Aussie can react twice: once to the dollar move and again as share markets digest the news. The lesson on jobs data and NFP explains how the report is read.
When to trade AUD/USD: Sydney, Asia and the overlap
Most majors sleep through Asian hours. AUD/USD does not, because its home market opens the week and its main data, its central bank and its biggest customer all report while Asia is at work. The clock below shows the four main trading sessions in your own time zone.
Open now: …
The four forex sessions in your local time. AUD/USD has home-market activity in the Sydney and Tokyo hours, when Australian and Chinese data and RBA decisions land, and its deepest liquidity in the London–New York overlap.
A typical weekday for the Aussie has two busy windows rather than one, as the stylised profile below shows.
Here is how the day usually unfolds, using Sydney and London clocks:
- The Monday open. Sydney is the first major centre to trade after the weekend, early on Monday morning there and on Sunday evening in Europe. Liquidity is thin, spreads are wide, and any weekend news can open the pair away from Friday’s close, a move traders call a gap.
- Sydney morning (from 11:30 am Sydney time). Australian data from the ABS arrives, and Chinese releases follow during the Asian morning. This is when the Aussie’s own news is priced.
- Sydney afternoon on RBA days (2:30 pm Sydney time). The decision and statement land, with the press conference an hour later.
- London open (about 08:00 UK time). European volume arrives, and moves made in Asian hours are either confirmed or unwound.
- London–New York overlap (roughly 13:00 to 17:00 UK time). Usually the deepest liquidity of the day. US data and the US share market open can move the pair sharply.
- Late US evening. Activity fades, spreads drift wider around the daily rollover, and the cycle starts again as Sydney wakes up.
Which window suits you depends on where you live. In Australia or Asia, the Aussie is one of the few majors with genuine news-driven movement in your daytime. In Europe, you will usually trade it in the London morning or the overlap. Either way, pick hours you can be present for. Our guide to forex market hours and the lesson on market sessions cover time zones and daylight saving in detail.
AUD/USD and NZD/USD: the correlation to respect
The Aussie has a close neighbour. The New Zealand dollar, the Kiwi, shares many of the same drivers: China is New Zealand’s largest export market, both are commodity currencies, and both are sold in a panic and bought on calm days. As a result, AUD/USD and NZD/USD tend to move closely together, with a correlation often around +0.8 over long periods, although it varies.
That relationship is useful in two ways. As confirmation, a setup on AUD/USD carries more weight when NZD/USD and iron ore are telling the same story. As a warning, holding both long AUD/USD and long NZD/USD is mostly one position, not two. The pairs drift apart mainly when one central bank surprises and the other does not, or when a story is specific to one economy, such as a sharp move in dairy prices for New Zealand. Our NZD/USD trading guide covers the Kiwi side in detail.
The Aussie also correlates with other dollar pairs, because a broad dollar move pushes all of them at once. The grid below does not include NZD/USD, but it shows how AUD/USD tends to move with EUR/USD and GBP/USD and against USD/CAD, the other commodity-currency major. Tick a few positions in the exposure counter to see how quickly separate trades become one dollar bet.
Typical correlation between pairs
| EUR/USD | GBP/USD | AUD/USD | USD/JPY | USD/CHF | USD/CAD | |
|---|---|---|---|---|---|---|
| EUR/USD | ||||||
| GBP/USD | ||||||
| AUD/USD | ||||||
| USD/JPY | ||||||
| USD/CHF | ||||||
| USD/CAD |
Tap any cell to see what that correlation means for two open positions.
How many times are you really betting on the dollar?
Illustrative long-run correlations between AUD/USD and other majors, not live data. AUD/USD tends to move with EUR/USD and GBP/USD and against USD/CAD and USD/CHF, so stacking these trades can multiply one dollar view.
Our guide to currency correlation explains how to measure these links, and the lesson on correlation risk shows how to cap total exposure.
AUD/USD trading: how to size a position
Position size decides how much a wrong trade costs you, and on AUD/USD the fixed $10 pip makes the sum short. Fix the money you are willing to lose, your risk per trade, then divide it by the stop distance in pips and by $10 to get standard lots. Try your own numbers in the calculator below: enter your balance, your risk percentage and the stop in pips, and leave the pip value at $10.
When correlated pairs are involved, treat the combined position as one trade and split the risk between them. The worked example shows both steps.
Our guide to position sizing in forex covers the method in full, and the lesson on position sizing shows how to apply it to any pair.
Common mistakes when trading AUD/USD
Watching only Australia
A good Australian jobs report can be swamped by weak Chinese data the same day, or by a sell-off on Wall Street overnight. Before any AUD/USD trade, check the three engines: China and commodities, the RBA–Fed balance, and the risk mood.
Assuming iron ore always leads
Iron ore and the Aussie often move together, but not always. A rise driven by a mine outage, a rate story that runs the other way or a broad dollar rally can break the link for weeks. Treat a commodity move as context, not a trigger.
Doubling up with NZD/USD
Long AUD/USD and long NZD/USD feel like two trades. In a risk-off move they usually behave like one large one, and both stops can be hit in the same hour. Count them as one idea and size accordingly.
Trading through Asian data by accident
Australian data, Chinese data and RBA decisions all arrive while Europe and the Americas sleep. Holding a position overnight without checking the Asian calendar means accepting news you did not plan for. Check the calendar before you leave a trade open.
Ignoring the Monday gap
The Aussie is first to reopen after the weekend, often in thin conditions. A stop can be filled away from its level if the pair gaps. Be cautious about holding full size over weekends with major news pending.
Frequently asked questions
Why is AUD/USD called the Aussie?
Aussie is the market's nickname for the Australian dollar, taken from the everyday word for Australian. Traders use it for both the currency and the AUD/USD pair, so 'the Aussie is higher' means AUD/USD has risen.
How much is 1 pip worth on AUD/USD?
Because the US dollar is the quote currency, one pip on AUD/USD is worth $10 on a standard lot of 100,000 Australian dollars, $1 on a mini lot and 10 cents on a micro lot. If your account is in another currency, your broker converts that dollar value at the current rate.
What moves AUD/USD the most?
Over months, the gap between Reserve Bank of Australia and Federal Reserve interest rates, and expectations for it, matters most. Day to day, the biggest moves usually come from Chinese demand and iron ore prices, shifts in global risk mood, Australian jobs and inflation data, US jobs and inflation data, and surprises from either central bank.
What is the best time to trade AUD/USD?
There is no single best time, but the pair has two active windows: Asian hours, when Australian and Chinese data and RBA decisions land, and the London–New York overlap, when liquidity is deepest and US data is released. Trade the window you can actually be present for.
Why does AUD/USD follow China?
China is Australia's largest trading partner and buys most of its iron ore. When Chinese steel and construction activity is strong, demand for Australian exports and for Australian dollars tends to rise. Weak Chinese data tends to have the opposite effect, though rates and risk mood can override it.
Do AUD/USD and NZD/USD move together?
Usually, yes. Both are commodity currencies with China as a major customer, and both tend to rise in risk-on markets and fall in risk-off ones. Their correlation is often around +0.8 over long periods, but it weakens when one central bank surprises.
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