AUD, the commodity currency
The Australian dollar (AUD) belongs to the "commodity currencies" group with Canadian dollar (CAD) and New Zealand dollar (NZD). Its value depends heavily on commodity prices exported by Australia — mainly iron ore (28 % of exports), coal, liquefied natural gas (LNG), and gold.
The China-AUD correlation
Australia exports ~35 % of its goods to China. When Chinese economy slows (2021-2024 real estate crisis, industrial slowdown), iron ore demand drops → iron price falls → AUD/USD declines. Inverse also true: when China announces stimulus, AUD/USD jumps in hours.
It's a specificity: to anticipate AUD/USD, many traders prioritize Chinese indicators (Caixin PMI, Chinese GDP, Shanghai/Shenzhen indices) over Australian ones.
Main drivers
- Iron ore price (correlation +0.8): Singapore Iron Ore 62 % Fe benchmark
- Fed vs RBA differential (Reserve Bank of Australia)
- Risk-on / risk-off sentiment: AUD is a "risk currency", falls during global stress
- Chinese economic data: GDP, PMI, exports/imports, PBoC decisions
- Australian data: CPI, retail sales, monthly employment report, RBA decisions (1×/month)
Volatility and spread
AUD/USD has a typical daily range of 50-80 pips. Typical spread: 1-2 pips on market-makers, 0.5 pip on ECN. The Asian session (7 PM - 3 AM ET) is very active on this pair — but London-NY overlap brings the most liquidity.
Who it's for
Serious AUD/USD trader = Sino-Pacific macro trader. It's a technical pair for those tracking China, commodities, and Asia-Pacific dynamics. To avoid for beginners who don't follow Chinese news — moves can surprise without macro context.