Why is the EUR/AUD an important market?
The currency pairing of EUR/AUD is one of the most traded pairs in the foreign exchange market, representing a significant share of daily trading. It's a pairing which is popular amongst veteran traders and newcomers alike.
EUR/AUD trading hours
The foreign exchange market is open 24 hours a day, but UK trading specifically tends to become active around 8:00 AM, before tapering off from 5:00 PM. Throughout the day there will be times when the EUR/AUD currency pairing experiences higher volumes of trading – this usually occurs around the same time as major market announcements. So if you want to trade the euro to Australian dollar pairing this would be the best time to.
In the following sections, we're going to take a look at the history of the euro to Aus dollar (EUR/AUD) pairing, what factors can influence its movements over time, and why exactly EUR/AUD trading remains so popular.
History of EUR/AUD
Despite being a relatively new forex pair, the EUR/AUD pairing has proven to be a mainstay in modern currency trading.
The euro itself was first envisioned at the beginning of the 20th century, however, it wasn't fully realised until the end of the century. First as a purely digital currency and then as physical notes and coins. This common currency - for a large proportion of Europe - quickly gained traction and was positioned as a leading world currency. Trading in the euro swiftly developed into a new and popular market.
The Australian dollar was preceded by the Australian pound in the 1960s. Australia decided to replace the old imperial system and move forward using AUD. As the country is so close to the Asian continent, import and export between the two have impacted the AUD greatly over the years.
Look below at the EUR/AUS price history (EUR/AUS conversion rate):
Factors influencing the EUR/AUD
All currency pairings are unique and influenced by a variety of factors, which we'll explore in these next two sub-sections. We'll begin with a look at what factors can influence the euro, before moving on to the Australian dollar.
Role of EUR
Interest rates play a major part in the oscillation of the EUR/AUD exchange rate. Therefore, the European Central Bank (ECB) is one of the major bodies which investors and traders will pay close attention to when making decisions. The ECB releases monthly reports concerning rates and rate statements, which are used as indicators about possible future policy direction.
Another factor that is considered is employment numbers, which are readily available to view. Consolidated employment numbers for the region impact the pairing greatly and can be a vital source of information for investors and traders.
Role of AUD
Many political and economic factors come into play when trading the AUD. A particularly important point to look out for is the import and export industry of Australia. For decades, the price of the Australian dollar stayed strong, due to the successful export of commodities such as coal, iron ore, and a number of others.
Obviously, the data available about the economic health of a country is always useful to traders. In Australia, the Reserve Bank of Australia plays the central role in determining the value of the AUD at any given time. Another financial point to consider is the exceptionally low-interest rates on Australian Government debt.
How to trade EUR/AUD CFDs
An individual can trade EUR/AUD with either a forex contract or alternatively, they can trade a contract for difference (CFD) on a particular currency pair, and speculate on the price difference.
A CFD is a financial instrument typically between a broker and an investor, where one party agrees to pay the other the difference in the value of a security, between the start and end of the trade. You can either hold a long position (speculating that the price will go up) or a short position (speculating that the price will fall). This is considered a short-term investment or trade as CFDs tend to be used within a limited timeframe.
For instance, to trade the EUR/AUD currency pair using CFDs, you speculate on the direction of the underlying asset. If you think the euro will appreciate then take a long position by buying the CFDs. If you think the euro will lose value versus the Australian dollar then you would take a short position by selling CFDs.
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Why trade EUR/AUD CFDs with Capital.com
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Trading on margin: providing trading on margin (20:1 for non-major forex pairs), Capital.com gives you access to the EUR/AUD pair with the help of CFDs.
Trading the difference: by trading CFDs on EUR/AUD, you speculate on the rise or fall of its price. CFDs trading is no different from traditional trading in terms of its associated strategies. A CFD trader can go short or long, set stop and limit losses and apply trading scenarios that align with his or her objectives.
All-round trading analysis: the browser-based platform allows traders to shape their own market analysis and forecasts with sleek technical indicators. For instance, a trader could choose to have EUR/AUD analysis and forecasts as a big part of their feed. Capital.com provides live market updates and various chart formats, available on desktop, iOS, and Android.
Focus on safety: Captal.com puts a special emphasis on safety. Licensed by the FCA and CySEC, it complies with all regulations and ensures that its clients’ data security comes first. The company allows to withdraw money 24/7 and keeps traders’ funds across segregated bank accounts.
For somebody new to the world of the foreign exchange market, it can seem intimidating at first. However, once you've grasped the basics, trading on Forex is actually quite similar to other markets. There are just a few key differences.
As an interbank market, the foreign exchange market operates slightly differently to other markets. There is no central exchange and large financial institutions trade with each other to create the market. Because of this, the volumes are huge in comparison to other financial assets, which actually lowers the overall costs.
This is a question that many people ask when they're first getting to grips with how the market works. If you're used to traditional trading you might wonder what exactly is different here.
As it's a speculative purchase you are making on the foreign exchange market, it helps to think of the transaction like this: if you believe the Australian dollar will fall and euro will rise, then by buying EUR/AUD in one transaction using CFDs, you would be buying the euro and selling the Australian dollar.
A pip is merely the smallest increment of trade in the foreign exchange market. It stands for 'percentage in point.' When you trade euro to Australian dollar the pairing is quoted to four decimal points, so a pip is just the lowest amount that can possibly be added to (or subtracted from) this figure.
The simple answer is 'no' – we at Capital.com make money through the bid-ask spread. This is different from traditional trading where a broker would earn commission on every buy and sell that the customer takes part in.