AUD/USD falls to 0.6600 as stocks trade lower

Australian dollar fell to 0.6600 against the US dollar making new lows on the year as economic data out of Australia, New Zealand, and China continues to underperform that of the US.

Economic sentiment slows

The overall stock market moved lower with Chinese stocks and those from neighboring regions like Australia being hit particularly hard on weaker-than-expected economic data including recent Retail Sales, GDP, and Trade Balance numbers.*

Australian dollar has had a positive correlation to the stock market over the years given its close economic ties to industry and geographic ties to China, which can result in general risk-off trade translating to downside for the AUD/USD pair if there's not prevailing story from the Australian economy or Reserve Bank of Australia.

AUD/USD daily prices

Will Australian dollar collapse?

AUD/USD is still more than 300 pips above its lowest values for the last few years, and, while the economic data out of the general region has not been great, it has not necessarily signalled a crash.

Of course, anything can happen in this forex marketplace that's seen its fair share of price extremes in the 2020s, but fear of an all-out collapse would likely only start to set in if AUD/USD were to near those recent lows of 0.6200.

Historical prices for AUD/USD

Going back to 2005, the Australian dollar has averaged around 0.7500 against the US dollar, and AUD/USD has been as high as 1.1000 - spending a couple years above parity around 2012.

That said, the major forex pair did break below 0.6000 for less than a month at the outset of the Covid pandemic in early 2020, and a similar amount of fear could send AUD/USD significantly lower.

How to trade AUD/USD

1. Open an account to get started, or practice on a demo account
2. Choose your forex trading platform
3. Open, monitor, and close positions on AUD/USD

Trading forex markets like AUD/USD requires an account with a forex provider like IG. Many traders watch other major forex pairs like EUR/USD and USD/JPY as well for more potential opportunities. You can help develop your forex trading strategies using resources like IG’s Trading Academy.

Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.

Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.

*IG US LLC is a registered Retail Forex Exchange Dealer that offers retail foreign currency contracts to its customers and serves as the counterparty for/to them. IG US does not act as an agent, provide execution services for, or otherwise facilitate securities transactions. All stock data was sourced by Yahoo! Finance.