US dollar is surging. Here's why.
US dollar continues to gain on AUD and other major currencies entering September. Find out possible factors for recent USD success and what's to come for the rest of the year.
Key points
- UUP, a USD ETF, is through year-to-date highs
- AUD/USD hit year-to-date lows this week under 0.6400
- There is a 45% chance of another rate hike in 2023 according to CME's FedWatch tool
Flight to quality
UUP, a USD ETF tracking US dollar against a basket of other major currencies, is now through 2023 highs reached in August. This relative US dollar strength could be the result of a flight to quality amidst global fear over inflation in other regions.
US interest rates remain high compared to other major countries, with the possibility of more rate hikes on the table. CME's FedWatch tool currently forecasts a 45% chance of another hike before 2024.
The Reserve Bank of Australia, however, elected to hold rates at 4.1% this week for the third consecutive meeting. AUD/USD traded lower as a result, closing tuesday at its lowest price year-to-date at 0.6379.
How to trade AUD/USD
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- 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 GBP/USD 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.
This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. See our Summary Conflicts Policy, available on our website.
Live prices on the most popular forex markets
See more forex live prices
Prices above are subject to our website terms and agreements. Prices are indicative only
