Of the so-called group of forex "majors," the Australian dollar is the fifth most actively traded currency behind the U.S dollar, the euro, the Japanese yen, and the British pound. The current fundamentals driving Australian dollar price action include exposure to Asian economies, commodity price cycles, and the carry trade, in this case referring to traders borrowing money in Japan and investing in Australian fixed-income instruments to exploit the interest-rate differential between the two countries.

To find the Aussie dollar’s unique characteristics, we reviewed daily data for the AUD/USD pair from April 3, 2006 through March 30, 2007 (259 trading days).