THE AUSTRALIAN DOLLAR/CANADIAN DOLLAR
Another major currency pair that should be considered by many traders as a solid addition to their portfolio. It is highly recommended that you read the information below before deciding if investing in these currencies is right for you.
WHO SHOULD CONSIDER TRADING THE AUSTRALIAN DOLLAR/CANADIAN DOLLAR?
Long-term traders should also add these currencies to their list of possible options. While there is a profit to be made in the short term, the longevity can be appealing for this currency pair, due to the stability of these currencies and their respective economies.
Diversification seekers can take advantage of these currencies to potentially minimise their risk. This is especially important for portfolios dominated by commodities and stocks.
WHY DISCUSS THE AUD/CAD?
Both Australia and Canada are members of the British Commonwealth and have enjoyed a long and prosperous history. Shared ideological and historical ties ensure that both countries will remain on friendly terms over the coming years and will continue their trading relationship.
From a trader’s perspective, this is an ideal currency pair. Information is readily available in English, along with increased transparency and appreciation for the rule of law. All of these make for a stable financial environment that appeals to many traders.
WHAT YOU NEED TO KNOW ABOUT THE AUSTRALIAN DOLLAR AND THE CANADIAN DOLLAR
Combining both markets equals a total GDP of 2.7 trillion USD annually. These numbers become even more impressive when we consider that the populations of both countries are rather low, when compared to larger economies. Also, Australia’s poor geographic area has not hindered its economic growth. Despite its isolation, Australia is one of the most successful economies in the world.
Compared to Australia, Canada’s geographic location is golden. Its close proximity to the United States has earned the country plenty of prosperity, strengthening the Canadian Dollar throughout the years.
HOW HAVE THE TWO CURRENCIES FARED AGAINST EACH OTHER OVER THE LAST TEN YEARS?
The Aussie was hit hard during the economic crisis in 2009, greatly depleting its value. The Canadian Dollar on the other hand, performed significantly better, due to a strong banking system and an economy that was not as susceptible to the world markets. Over the last several years, both currencies have hovered at the 1:1 ratio. This is mainly because both economies are strong, stable and able to meet the needs of their local markets.
WHAT ARE THE FACTORS THAT MOVE THE AUD CAD VALUE?
When trading the Aussie and the Loonie, it is important to consider financial reports coming out of North America. Canada’s trading relationship with the United States is very important and plays a crucial role in the country’s currency. For the AUS, the relationship with New Zealand, Canada, America and the EU is paramount because of the country’s isolated location. Without advantageous agreements, the Australian Dollar may not be able to compete with other major currencies.
WHAT YOU MAY WISH TO CONSIDER
Brexit could have serious implications for both currencies. The UK departure from the EU is scheduled for 2019. It is important for traders to track the fallout of this departure and what kind of agreements take place between the parties involved.
Central banks in both countries play a massive role in determining the respective performance of both currencies. When trading, wise traders will pay close attention to interest rate decisions. In addition, the economic calendar for both nations is robust. With many different economic reports, it is important to not only track the results, but to determine which of these reports has the greatest impact.
HOW DO I TRADE THE AUSTRALIAN DOLLAR/CANADIAN DOLLAR?
The majority of traders will be able to choose one of three popular options. But not all the options are created equally. It is important to weigh the pros and cons and come to the right decision.
Banks and financial institutions: These have historically been the most popular option. Banks have offered currency exchange services for many years. While they certainly have the experience, banks can no longer provide traders with the flexibility they need to take advantage of market opportunities in a short amount of time.
Online brokers: Over the last several years, this option has become the most popular all over the world. Brokers, such as eToro, can offer dynamic trading solutions, leverage services and hundreds of different financial assets, on a single platform. eToro is a regulated broker, providing you with peace of mind and security for your investment.
There are several futures and options that traders can use to be on a market in general. Betting on an entire market is very similar to speculating on a currency. However, this type of financial asset requires more knowledge and understanding than the average trader possesses.
IS TRADING THE AUD/CAD RIGHT FOR ME?
The Australian Dollar and Canadian Dollar can be targeted by investors looking for some long-term stability in their portfolio. It may also appeal to traders entering the currency market for the first time. This currency pair should be scrutinised by every trader and considered as a viable option.
*This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation.
*Past performance is not an indication of future results. All trading carries risk. Only risk capital you’re prepared to lose.