What is AUD/SGD?
The AUD/SGD forex trading pair indicates the rate of exchange between the Australian dollar (AUD) and the Singapore dollar (SGD), or how many SGD are required to purchase one AUD. It is classified as a minor currency pair since it is not as widely traded as major currency pairs such as EUR/USD or USD/JPY. However, as it combines the dynamics of two significant economies in the Asia-Pacific region, it offers opportunities for traders to benefit from fluctuations in exchange rates.
What affects the price of the AUD/SGD pair?
The interest rates set by the Reserve Bank of Australia (RBA) and the Monetary Authority of Singapore (MAS) are significant factors that influence the price of the pair. The demand for AUD may rise as a result of higher interest rates in Australia compared to Singapore, which could increase the value of AUD/SGD. Conversely, the demand for SGD might rise if Singapore's interest rates were higher, resulting in a decline in the AUD/SGD exchange rate.
The business ties between Australia and Singapore, as well as the developments in the Asia-Pacific region, are of special importance to the AUD/SGD pair. Events such as changes in political leadership, regional conflicts, or economic integration initiatives can impact market sentiment and, consequently, the AUD/SGD exchange rate.
The price of commodities also has an impact on the AUD/SGD pair. Singapore's economy is built on intermediate commerce, while Australia is a major exporter of iron ore, coal, and natural gas. As a result, Singapore is susceptible to the demand for refined petroleum and electrical products since it imports the resources and raw materials that it refines and exports. The AUD normally benefits from rising commodity prices, while falling prices might make the AUD less competitive against the SGD.
What to watch out for when trading AUD/SGD?
Given that the AUD/SGD pair is less often traded than major currencies, traders should be aware of its volatility. This may result in abrupt price changes, necessitating risk management techniques to safeguard investments. Additionally, because Australia and Singapore are in separate time zones, the active trading hours for AUD/SGD may vary. It is crucial to keep an eye on any announcements made by the two countries' major decision-making institutions. These include:
- Reserve Bank of Australia (RBA) and Monetary Authority of Singapore (MAS) for Interest Rate announcements and policy decisions
- Australian Bureau of Statistics (ABS) for data on Trade Balance, Unemployment Rate, Consumer Price Index (CPI), and Gross Domestic Product (GDP)
