Top 6 Things You Need to Know When Trading in Australia

In this article, we are going to run through the most important data points and markets Australian traders should be focused on to access the greatest opportunity for your trading dollars.

We’ve identified six key things you need to know to extract every possible opportunity out of our trading day.

Let’s get straight into it.

1. The Reserve Bank of Australia (RBA) interest rate decision

The RBA meets on the first Tuesday of every month to deliver their interest rate decision. The RBA decision is delivered at 230pm AEST.

The June 2019 RBA meeting saw the majority of analysts predicting a 0.25% rate cut, and they were right.

Leading up to the announcement, the Aussie dollar had priced it into the market, so the expectation was set, and as a result, the Aussie dollar rallied.

You can see the reaction on the 5-minute chart below. The market took off on the news of the 0.25% rate cut and then promptly retraced those gains.

Source: AxiTrader

In terms of importance, the RBA rate decision is the biggest news for AUD forex traders each month.

You can also expect the high volatility around this time, especially if the final result is unexpected.

For example, across the ditch, the Reserve Bank of New Zealand (RBNZ) cut rates by 0.5% on the 7th of August. The forecast was a cut of 0.25%.

As a result of the unexpected move, the Kiwi dollar fell 109 pips in 10 minutes. You can see the size of the move in the 5-minute chart below.

Source: AxiTrader

2. Australian employment data

Another key economic figure closely watched by forex traders is the Australian employment data. The Australian Bureau of Statistics (ABS) releases this figure each month and the volatility around the Aussie dollar at the time is ideal for short-term traders.

The more people employed in Australia, the greater the chance of more consumer spending. This has a domino effect in helping stimulate economic growth and overall sentiment.

As you can see in the chart below, July 2019 employment data was extremely positive, and the Aussie dollar rebounded strongly from the overnight sell-off.

There are a couple of key data points analysts watch for, and they are:

  • The number of new jobs being added for the month
  • The number of new jobs added over the last 12 months
  • Labour force participation rates. In July, this figure hit 66.1% vs 66% expected.
  • The overall unemployment rate. In July, it remained steady at 5.2% vs 5.2% expected

Source: AxiTrader

As a trader, you always want to see some volatility, so you must focus on the few times each month that the big economic releases are happening.

3. You should watch the economic data out of China

You are no doubt already aware that China plays a huge role in the demand for the Australian resources sector.

According to economist Dr Anne Holmes, Today, China is Australia's largest trading partner in terms of both imports and exports. Australia is China's sixth-largest trading partner; it is China's fifth-biggest supplier of imports and its tenth biggest customer for exports. Twenty-five per cent of Australia's manufactured imports come from China; 13% of its exports are thermal coal to China.

As a result, it is important for Australian traders to keep an eye on the Chinese data releases hitting the newswires each month.

For example, in mid August 2019, we had the following releases from China, which put a dampener on the Aussie dollar, the Aussie 200 index and individual stocks on the ASX.

  • Chinese Industrial Production (YoY) 4.8% vs 6.0% exp.
  • Chinese Industrial Production (YTD) 5.8% vs 6.0% exp.
  • Chinese Retail Sales (YoY) 7.6% vs 8.6% exp
  • Chinese Retail Sales (YTD) 8.3% vs 8.4% exp

Other key releases include the Trade Balance, PMI, CPI and PPI figures. You can view all upcoming economic announcements via our calendar here.

4. Trading the Aussie 200 index

One of the most common ways for share traders to transition to CFDs is to start trading the Aussie 200 index.

Most traders are extremely familiar with the top 200 ASX stocks and know all the big players intimately.

At a sector level, the Aussie 200 index is dominated by the Financials and Materials sectors.

  • Financials combined account for 30% of the ASX 200 index
  • Materials combined accounts for 18.6% of the ASX 200 index

On an individual stock level, the top 10 ASX stocks are weighted as per below (courtesy https://www.asx200list.com/ on the 15th of August 2019):

Company

Sector

Market Cap

Weight (%)

Commonwealth Bank

Financials

146,540,000,000

7.71

BHP Group Limited

Materials

121,251,000,000

6.38

Westpac Banking Corp

Financials

98,974,400,000

5.2

CSL Limited

Health Care

97,424,800,000

5.12

ANZ Banking Group Limited

Financials

79,923,900,000

4.2

National Aust. Bank

Financials

75,120,300,000

3.95

Telstra Corporation

Telecommunication Services

45,789,200,000

2.41

Macquarie Group Limited

Financials

42,680,600,000

2.24

Woolworths Group Limited

Consumer Staples

41,826,300,000

2.2

Wesfarmers Limited

Consumer Discretionary

40,999,700,000

2.16


If you have been monitoring the top ASX stocks, then you likely have an excellent feel for how the Aussie 200 will trade on a daily basis.

Professional traders know how important it is to monitor the top 50 stocks that make up the Aussie 200 index.

At AxiTrader, you have access to the following two contracts:

  • AUS200 – 1% margin , and a minimum contract size of $1/point.
  • SPI200 – Contract size is 25 (just like the underlying futures market), and you can trade it with just 1% margin. But the difference to the SPI Futures contract is you can trade as little as $0.25 point .

The difference is the AUS200 is a cash index so the chart will be ‘rolling’ whereas the SPI200 is based on the futures and will adjust as the underlying futures contract expires.

5. Volatility for the early Aussie risers

Accessing volatility is of high importance for those who are looking to trade on shorter timeframes.

The Forex majors can be quite volatile moving into the US market close.

The biggest moves across all markets tend to be on the open and heading into the close.

As a result, many traders like to create trading systems that take advantage of the volatility across the FX majors from around 4am onwards here in Australia (AEST).

Depending on daylight savings either in America or Australia, most of the volatility happens from around 4 am to 7 am AEST each day.

6. Trading Forex volatility when you get home from work

When it comes to trading Forex, the Australian and Asian sessions are usually pretty quiet, and things don’t pick up until the opening of the European session.

During the Aussie/Asian session, you may want to find your FX trading opportunities on the daily chart and then get ready in the evening around 5 pm AEST, to time your entry using the hourly charts.

Many Australian traders love to trade both the FX majors, the FTSE and DAX indices when they come home from work. At this time, these markets are opening, active, and there’s plenty of volatility.

Hopefully, you have found these six items of great interest, and it highlights some areas you can add to your daily repertoire as a trader.

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