Best Brokers for Trading Australian Dollar May 2025

Compare the Best AUD/USD Trading Brokers

Why is the AUD/USD an important market?

The Australian/US Dollar (AUD/USD) currency pair, informally known as the 'Aussie', is a popular currency pair that accounts for approximately 5% of the total FX market in terms of volume. Day traders can often see high levels of volume and volatility due to the disparity in interest rates between the two currencies.

In this market, the Australian dollar is the base currency and the US dollar is the quote currency. This means that the AUD/USD price at any given time is the amount of US dollars that one Australian dollar can buy. 

AUD/USD Trading Hours

Theoretically, you can trade currency pairs 24 hours a day, 7 days a week, but there are peak trading hours for AUD/USD when the currency pair is more volatile. Trading hours for the Australian dollar against the US dollar are generally between 7pm and 4:30am (GMT).

History of AUD/USD

The Australian dollar has replaced the Australian pound. For decades, the Australian pound was pegged to the British pound until the devaluation of the latter in 1931. In the 1960s, the country decided to adopt the Australian dollar - a decimal currency - instead of the old imperial system.

Australia's trade relationship with China, with a large trade surplus for Australia, has historically been one of the factors supporting the Australian dollar. This relationship continues to play a dominant role in the rise and fall of the AUD.

The AUD/USD is the fifth most traded currency pair, but is not one of the six pairs that make up the US Dollar Index (USDX). The Australian economy is a major exporter of coal and iron ore, so it is very dependent on commodity prices, which is another factor that historically affects the value of the AUD.

Factors influencing the AUD/USD

Trade Relations: The trade relationship between Australia and the US unsurprisingly has a large influence on the AUD/USD currency pair. Australia and the US have a close economic relationship and are trusted trade and investment partners. Foreign investment from the US is worth over A$860.9 billion. The trade agreement that underpins this relationship is the Australia-United States Free Trade Agreement (AUSFTA), which came into force in 2005. Since AUSFTA, US exports to Australia have increased by over 91%.

Interest rate differential: The Australian dollar/US dollar pair is affected by the interest rates of the two respective currencies, set by the Reserve Bank of Australia and the US Federal Reserve. The Reserve Bank of Australia reviews the interest rate monthly, while the US Federal Reserve reviews rates eight times a year. The interest rate differential will affect the value of the AUD/USD exchange rate. For example, if the Federal Reserve raises the interest rate, money may flow into the US, strengthening the US dollar and therefore weakening the AUD/USD rate.

Why trade the aud/usd?

The Australian dollar is the fifth most traded currency in the global foreign exchange market, accounting for 6.8% of global forex turnover in 2019, according to the Bank for International Settlements (BIS). The institution compiles statistics in cooperation with central banks and is a good resource for assessing the size of the global FX market. However, it is important to note that non-institutional investors, or retail and/or individual investors, do not trade directly in the interbank market.

 
• Liquidity: the AUD/USD is highly liquid as it is one of the most traded currencies in the world. High liquidity facilitates trading, reduces slippage, lowers costs and deepens the market to guard against external shocks. Liquidity is important to traders as it measures the ability of a currency pair to trade on demand and move without large price swings when bought/sold in large quantities.
 
• Tight spreads: As a widely traded currency pair, the AUD/USD can have relatively tight spreads for retail traders. This can reduce the overall cost of trading, which is often an important consideration when choosing a currency pair.
 
• 24 hour trading: AUD/USD can be traded 24 hours a day, Monday to Friday, offering a seamless trading experience and generally easy entry and exit conditions.

4 Best Brokers for Trading AUD/USD

1. Pepperstone - Best Overall Broker for Trading AUD/USD.

   Pepperstone is well-known for offering a robust trading environment for AUD/USD traders. With competitive spreads, advanced trading tools, and fast execution speeds, Pepperstone stands out as an excellent choice for both novice and experienced traders.

2. FPMarkets - Top Choice for AUD/USD Trading.

   FPMarkets provides exceptional trading conditions for AUD/USD, featuring tight spreads, high-speed execution, and flexible leverage up to 1:500. Ideal for traders seeking exposure to the Australian and US dollar markets.

3. Plus500 - Best Broker with Multiple Licenses.

   Plus500 offers a secure and user-friendly platform for trading AUD/USD (CFDs). With numerous regulatory licenses and strong investor protection measures, Plus500 is ideal for traders seeking a reliable platform for various financial instruments.

4. XM - Best Platform and Excellent Brokerage for Beginners.

   XM excels by providing extensive educational resources and practical online workshops to support AUD/USD traders. Its user-friendly interface and comprehensive support make XM a great choice for beginners.

FAQ

Why is the AUD/USD so popular?

Australia is not a very large country in terms of GDP and population, but the Australian dollar is the fifth most traded currency. The reason why traders are so interested in the Australian dollar, and the AUD/USD in particular, is due to geology, geography and government policy. Geology is important because it has provided Australia with a wide range of valuable commodities for trade. Speaking of trade, geography has put the country in an ideal position to trade with Asian nations that have an insatiable demand for these raw materials. And the government's policy ensures stability in the economy and interest rates.

When is the best time to buy the AUD/USD?

When commodity prices rise, it tends to weigh on the economies of both developed and developing countries, as they end up spending more to acquire the commodities they need. In contrast, Australia is doing very well as its economy is heavily based on the sale of its commodities. This means that the Australian dollar is good to buy during periods when commodity prices are rising, or are already very high. It is also good to keep an eye on Asian demand for Australian commodities, as strong Asian demand is also positive for the Australian economy and the Australian dollar.

What factors have the most influence on the AUD/USD exchange rate?

There are two factors that can weigh most heavily on the AUD/USD exchange rate. The first is, unsurprisingly, the trade relationship between the US and Australia. While the Australian dollar is influenced by Australia's trade with Asian nations, this pair is more heavily influenced by trade between Australia and the US. The other factor is the interest rate differential between Australia and the US, with higher Australian rates making the Australian dollar more attractive against the US dollar. 

What are the highs and lows of the AUD/USD pair?

The all-time low for the AUD/USD is 0.4855 - it reached this value on 1 March 2001, partly due to a slowdown in the Australian economy. The all-time high is 1.09669 and was reached on 1 April 2011.