Forex Basics

The currency of the "Land Down Under" is the 6th most-traded currency in the world's foreign exchange markets. The Australian dollar accounts for 4% - 5% of worldwide foreign exchange transactions. Currency traders utilize the Australian dollar in their portfolio due to the limited government intervention in the FOREX market, the general stability of the country and the economy and the fact that it gives exposure to the Asian markets.

Current reports indicate that domestic demands for goods and services won't add as much to the economy as exports. Australia trades more actively with the European Union than the United States. In 2004, Australia imported 11% fewer goods from the U.S. as compared to 2002, reaching a level similar to South Korea or New Zealand. Reports indicate inflation will rise in the coming months but it will stay within the target range of 2% - 3%, a level set by the Reserve Bank of Australia.