Global events heavily influence the Australian forex markets, and this is because Australia is a small, open economy that is export-driven. Here we will look at how global events affect the Australian dollar. We will also discuss how traders can stay ahead of these events and trade accordingly.

What is forex trading, and how does it work?

Forex trading in essence is the exchange of one currency for another. It’s the largest and most liquid market globally, with trillions of dollars traded daily. Trading always works by simultaneously buying one currency while selling another. If you were to buy EUR/USD, you would buy Euros and sell US dollars. Currency pairs are quoted in terms of ‘bid’ and ‘ask’ prices. The bid price is the price at which you can sell the base currency, and the asking price is when you can buy the base currency.

The fx market is open 24 hours from Sunday afternoon to Friday afternoon (US time). That allows forex traders to trade around the clock, five days a week. Because there’s no centralised marketplace for forex trading, traders can buy and sell currencies directly from other market participants or through brokers. Liquidity is the key to success in forex trading. The more liquid a market is, the easier it is to buy and sell without worrying about large price movements.

How global events affect the Australian forex markets

The Australian forex markets are affected by many global events. As Australia’s largest trading partner, China’s fortunes directly impact the Australian economy. When China’s economy is doing well, demand for Australian commodities such as iron ore and coal increases, driving up the Australian dollar price. Conversely, when China’s economy slows down, the price of the Australian dollar typically falls.

Another important event that affects the Australian forex markets is the release of interest rate decisions from the Reserve Bank of Australia (RBA). When the RBA raises interest rates, it generally leads to an appreciation of the Australian dollar as investors seek to capitalize on high returns. However, if the RBA lowers interest rates, it typically leads to a depreciation of the Australian dollar as investors look for better returns elsewhere.

Ways to protect your investments from global volatility

Global economic conditions have become increasingly volatile in recent years, making it more challenging to protect investment portfolios from risk. While you have no guaranteed way to safeguard against market fluctuations, many strategies can help minimise the impact of global volatility on your investments.

One approach is to diversify your portfolio across asset classes, including stocks, bonds, and cash, and it will help balance out potential losses in one sector with gains in another.

Another strategy is to invest in low-cost index funds, which tend to be less volatile than actively managed funds. Alternatively, you could consider investing in Gold, which is often seen as a haven during times of economic upheaval. Whatever strategy you choose, it’s important to remember that global volatility is inevitable in the investment landscape.

By taking steps to protect your portfolio, you can help to ensure that your hard-earned savings are not unduly impacted by market turbulence.

How to stay informed about global events that may impact the Australian forex market

There are many ways to stay informed about global events that may impact the Australian forex market.

One way is to follow the news channels that focus on financial markets, such as Bloomberg or CNBC. These channels provide up-to-the-minute coverage of breaking economic news and often include expert analysis from market commentators. Another way you can stay informed is to read the financial pages of major newspapers. These newspapers often provide in-depth coverage of key economic events and can give valuable insights into how these events may impact the forex market.

Finally, many online resources provide real-time updates on global economic news, such as Forex Factory or Daily FX. By following these sources of information, you can ensure that you are always up-to-date on the latest developments in the global economy.