What moves the USD Dollar? 

Before making your decision to invest outside of the US, you should consider some of the factors that may impact the USD exchange rate.

The USA is the second largest exporter in the world exporting over 1.45 trillion dollars worth of exports in 2018. America is also the world’s largest importer of goods, and it is this trade balance that has a massive influence on the USD valuation.

Notable Factors in USD Valuations

The foreign currency market is the largest and most liquid in the world, with over 5 Trillion dollars changing hands a day. With these volumes attempting to forecast the movement of the USD exchange rate is tough, to say the least. These are some of the factors that our investors should be aware of:

• The globalization effect – US companies have never been so aggressive as they have now when it comes to global expansion and investment coupled with a certain Presidents approach to foreign policy one thing is certain and that is more uncertainty.
• Upcoming elections – Rarely in recent memory has there been a more tumultuous time for American politics and this looks set to continue over the next decade. With Political unrest market volatility often follows closely.
• Federal Reserve (the Fed) comments – with interest rate differentials between the US and other markets widening over the last year the demand for USD has surged.
• Speculation– 3% of the 5 trillion a day that is traded on the FX markets is for payments such as mortgages and office costs. That means the overwhelming majority of FX is traded by your banks and funds for speculative reasons. When someone like George Soros feels strongly about something, there is very little you can do just ask the Bank of England!
• Flight to safety – USD among other currencies can act as a safe haven play in times of uncertainty.

What moves the Aussie Dollar (AUD)?

The Aussie dollar consistently ranks among the top five most traded currencies in the world. The popularity of the currency is based in part on the following 3 factors:

1. Geology – Australia is rich with natural resources and premium commodities including iron ore, oil, and gold.
2. Geography – Australia’s proximity to Asia means they are an extremely convenient trade partner to one of the largest consumer of raw materials in the world.
3. Stability – Australia’s government generally maintains comparatively high-interest rates and beneficial trade policies.

Top Factors that Influence AUD Exchange Rates

Australia is one of three primary commodity currencies along with the New Zealand dollar (NZD) and Canadian Dollar (CAD). When attempting to predict the movement of the Aussie dollar, particularly as it relates to the US dollar, investors may take into account these country-specific factors:

• Farming
• Mining discoveries, performance, and regulations
• Economic growth or decline in Asia
• Reserve Bank of Australia announcements

Like many other commodity currencies, the Australian dollar can be volatile. That’s why it’s very important to look at hedging the risks when evaluating an AUD based mortgage. If you’re ready to make a large payment to Australia you should know that banks and other providers make huge profits on foreign exchange transactions, often as much as 4%. Below is a chart showing the last 5 years of USD/AUD, the pairing has moved 10% over the last year alone.

How it works