Forecast for the Australian Dollar vary from bank to bank and from month to month. This article looks at the different outlooks and is updated regularly.
Updated in May 2017
Volatility has rocked currency markets in 2016.
So far in 2017, the big surprise is how strong the Australian dollar has been. As a result, a few of the major banks have changed their forecasts.
ANZ has completely changed its mind on the Aussie dollar. It now expects the AUD/USD to move higher early in the year before losing ground and finishing 2017 around 72 cents
In October last year, the Commonwealth bank upgraded its forecast for the Australian dollar from 73 cents to 77 cents by the end of 2016. This year they are less upbeat on the AUD with their forecast seeing the currency falling to 71 cent by the end of this year.
National Australia Bank has a similar outook to CBA with its forecast for the Australian dollar in 2017. The bank expects the AUD to end the year at around 70 cents.
Along with the other 3 major banks, Westpac has the Aussie dollar falling throughout 2017 with an expectation of 72 cents by Q4.
While most forecast vary, many agree on the influences on the local currency. Here are the main three:
Australian Interest Rates
Quantitative Easing in other western economies
From the current exchange rate, most forecasts have the AUD trading lower by the end of the year. So what could make it move higher?
There are plenty of possible reasons but here are the 3 most likely:
The Chinese government artificially stimulates the economy, driving up demand for our commodities (and our dollar)
The US economy slows down and their central bank fails to increase interest rates
The Australian economy picks up along with inflation, removing the need for further interest rate cuts from the RBA
Discover which are the 3 Best Countries to Spend Your Australian Dollars in 2017.
The National Australia Bank does not predict as much volatility in the AUD EUR as the AUD USD. It thinks that it will start next year at a similar level to now at 67 cents (or 0.6700).
The Commonwealth Bank also has it trading fairly flat, just above 66 cents while Wesptac has come in the highest of the 3 banks at 0.6852.
Interestingly, NAB has a 0.6000 forecast for the AUD/GBP every quarter until September 2017. CBA is less bullish on this cross rate with a AUD GBP 2017 forecast of 0.5615
All 3 major banks we looked at, expect the AUD/NZD exchange rate to be at around 1.07000 leading into the new year, suggesting there is expectations of a rise in this rate.
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