Growth of GDP and how it affects AUD trading

It is undoubtedly true that growth of GDP enhances the spirit of an economy to a great extent. Thus, the GDP announcement in Australia during the second quarter of the year 2012 Indicates that the economy has grown at a high pace and the results are more positive than the predictions. As a matter of fact, the forecast of economic growth was at 0.5 percent although the results surpassed this figure by reaching 1.3 percent. The economic environment of Australia was not moving on a positive decision as there were lots of rumor about the movement of this currency or AUP across the world, the growth of GDP has broken all records and the phenomenal growth of Australian economy.

While the news about Australian dollar has been accepted with open minds, it has already changed or altered the economic growth and casts an effect on forex trading. Therefore, the AUD has shown better surfaces than the USD. The performance of AUD started improving on the very day on which the interest rate was cut by a half point by RBA. As a matter of fact, there has been a strong base of GDP even when the rates of inters were further cut by a quarter point during the early phase of June. Similarly for currency pairs or foreign exchange trading, there are two aspects to be handled. Thus, the strengthening of AUD was followed by an equally weak performance of USD according to the economic information put forth by the US Department of Labor. The non-farm payroll of USA, which is considered as one of the most important aspects in the growth of employment has fallen far below the estimated percent.

While this factor led to an effort that lowers the value of USD even if it is for a short time or temporary period, the behavior of AUD is also to be noted vis-à-vis the currency of USA thus affecting the forex market to a great extent. Thereafter, the growth or fall in the level of GDP combined with other economic news had a telling effect on forex trading particularly because such movements change the behavior of the currency of a nation. The foreign exchange traders should therefore try to keep a track of all the latest news from reliable sources before investing their money on a currency pair. Furthermore, frequent market updates and analysis must also be taken into account before arriving at a conclusion.

The information that has been established above is however not intended to influence the decision of the investors operating in the forex market; rather it is meant to tell them that changes or enhancement in GDP can actually affect the pattern of movements of a particular currency pair, which is otherwise considered stable. On the whole, trading in the foreign exchange market is like walking on a slippery slope as changes are much faster than they are anticipated. Thus, the decision making should not be based on any one factor at a given time and leveraging on a single factor must be avoided to a great extent.