If Australia has strong economic data, you will most likely consider buying the Australian dollar. Your first reaction may be to buy AUD/USD in the foreign exchange market.
But what if, at the same time, the economic data recently released by the United States also performed strongly? The AUD/USD exchange rate is likely to fluctuate slightly.
One of your choices is to choose a currency that is weak relative to Australia’s economic performance, so what should you do?
Ha, thanks to God for creating cross currency pairs!
For example, you did some fundamental research before trading, and you noticed from the financial calendar that Japan’s economic performance is currently not very good.
What should you do?
Of course, like most savvy traders, you will seize the opportunity and choose to go long AUD/JPY.
The basic qualities of being a trader when seizing a specific trading opportunity. Only then will you be able to load the rolling dollars in the foreign exchange market into your personal account.
Because of the existence of cross currency pairs, you can now trade the currencies of the economies with the best economic performance against those with the worst economic performance without trading the US dollar.