Is the Australian dollar about to go higher? We take a look at what the majors are saying and list the key influences on the AUD right now.
Let's look at December forecasts for the Australian dollar (AUD) from the major Australian banks. According to CBA and ANZ the AUD will move higher to 80 and 82 cents. In contrast, NAB and Westpac predict the AUD to remain around 75-76 cents, which means the AUD is currently where it should be.
Right now the Australian economy is still growing which means employment rates are improving, housing prices are stable and the stock market is going well. All of this is good for the Australian dollar.
The US Dollar (USD) is a key driver for Australian Dollar movement. When the USD rises, the AUD falls and vice versa. The USD is slowly rising, which has been a real drag on the Australian dollar.
Risk appetite refers to the fact that investors are more likely to take risks. That's what is happening right now, as investors are more willing to 'buy' AUD. When risk appetite improves, the AUD goes up. Especially since the Australian dollar is linked with 'risky' assets like commodities and Asian economies.
If commodity prices go up, the AUD also rises. Iron ore is Australia's largest commodity export and has the biggest influence on the Australian dollar. With commodity prices recovering, the AUD will also improve.
At this point, the Australian dollar can go either way. It's really difficult to make a call on the AUD even in the short-term. If the top 4 banks can't agree on where the AUD is going by the end of 2017, it will be even harder for you to do so.
General advice: The information on this site is of a general nature only. It does not take your specific needs or circumstances into consideration. You should look at your own personal situation and requirements before making any financial decisions.