How to Trade Currency Crosses With Fundamentals

If Australia's economic data is strong, you might want to consider buying the AUD. Your initial impulse may be to purchase AUD/USD.

But what if recent data also reveal that the United States is experiencing great economic growth？ The AUD/USD exchange rate may remain unchanged.

One possibility is to trade the Australian dollar against the currency of a struggling economy...

Currency crosses are a gift from the forex gods!

Let's imagine you've done some research and checked the BabyPips.com economic calendar (shameless promotion! ), and you've discovered that the Japanese economy isn't doing so well at the moment.

So, what exactly do you do？

Of course, like any self-respecting bully, you seize the moment and go long on the AUD/JPY!

Take note of the relative strength of AUD/JPY vs. AUD/USD in the chart above.

You aren't restricted to these currency pairs; you could also compare AUD to EUR, GBP, and CAD.

Then you can look for the currency that is the weakest to trade against.

Being a bully has no negative consequences.

As a forex trader, it's your job to seize particular opportunities in order to fill your piggy bank with silver dollars.

Currency crosses allow you to match the currency of the best-performing economy against the currency of the worst-performing economy without having to deal with the US dollar.