AUD to USD Forecasts in 2020 from Major Australian Banks
Uncertainty and fear about the coronavirus pandemic has driven the Australian dollar over 18-year lows below 58 cents. The AUD/USD is even lower than the levels reached during the Global Financial Crisis (GFC) and is heading towards the lows hit in 2000-2002 (the dot-com bust).
You would think the 'Big 4' banks would be downgrading their Aussie dollar forecasts, but with so much volatility and uncertainty most of them are taking a 'wait and see' approach.
Banks had already anticipated a weaker Aussie dollar in 2020, with just a minor uptick by the end of the year, but recent events will certainly change their outlooks.
How will coronavirus affect exchange rates?
Uncertainty from the coronavirus pandemic increases volatility in currency markets. Generally, safe-haven currencies like the USD, CHF and JPY will likely move higher. However, commodity currencies such as the AUD, NZD, CAD and ZAR exchange rates will likely fall.
The good news is, the Australian government has announced a stimulus package that could help support the economy.
AUD to USD Long Term Forecast Summary
- ANZ - Expect the AUDUSD exchange rate to be 68 cents in December 2020
- Westpac - Also predict the AUDUSD rate to be 67 cents by December, a 9% decline from their previous AUDUSD forecast
- CBA - Slightly higher than ANZ and Westpac. CBA forecast the AUDUSD rate to be 70 cents by the end of 2020
- NAB - Like CBA, NAB's forecast shows the AUDUSD rate around 71 cents by the end of the year
Check today's AUDUSD Forex Rate: AUD to USD Currency Converter and Graph
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USD to AUD Bank Forecast
Exchange rates are the relative prices between two currencies and this is why currencies are expressed in pairs.
The major Australian bank forecasts are in Australian dollar terms, or the currency pair AUDUSD. But if you're interested in bank forecasts in US dollar terms or USDAUD you can calculate it.
To convert from USD to AUD all you need to do is divide 1 by the rate.
For example, if the AUD to USD exchange rate is 0.75, then 1 Australian dollar is worth US$0.75 or 75 cents. You divide 1 by 0.75 to find the USD/AUD exchange rate of 1.3333. In this example, $1 US dollar is equivalent to $1.3333 Australian dollars.
Bank USDAUD exchange rate forecast
Where to find the best AUDUSD cash rate
In Australia, the best cash rates are found in major cities. We regularly check the main money changers in each CBD to find out the best exchange rates in town.
Will coronavirus affect cash collection?
Supply of money might be impacted. Make sure you seek out your money changer to make sure your currency is available ahead of time.
How to track down the best cash rate
You can either walk around to each money changer, try and call each one and check their rate or you can use our city and suburb guides:
What is the AUDUSD or the 'Aussie'?
Australian Dollar to US dollar forecasts in this guide refer to the AUDUSD. The AUDUSD tells you how many US dollars are needed to purchase one Australian dollar. This currency pair is also known as the "Aussie".
Due to its major commodity exports, Australia is one of three primary commodity currencies. The other two are the New Zealand Dollar (NZD) and Canadian Dollar (CAD). Key commodity exports include raw materials such as iron ore, coal, precious metals, oil, agricultural and farming products.
Does the Aussie exchange rate change a lot?
Yes. Like most currencies, the Australian dollar can change quickly. That’s why it’s important to consider hedging, especially if you're a business transferring money overseas. Many foreign exchange companies or money transfer services offer rate alerts online to help you get the best exchange rates.
Why is the Australian dollar so low?
There are many reasons the Aussie dollar keeps falling, including:
- Coronavirus Pandemic: When there's uncertainty on a global level that impacts so much of the population, people will spend more on essential items and are less likely to spend money for non-essential goods and services, such as travel. This has a significant impact on the Australian economy and a lower AUD.
- Weak Australian economy: The Reserve Bank of Australia (RBA) cut the cash rate by 0.25 recently to 0.5%. This was done in response to turmoil in financial markets, driven by fears about the impact of the coronavirus pandemic. The OECD said Australia's GDP growth could be cut by 0.5% from coronavirus. A weak economy leads to a lower Aussie dollar.
- United States currency (USD): When the US dollar rises, the Australian dollar falls. This is because the AUDUSD is a currency pair. The US dollar is getting stronger.
- Weak Chinese economy: About 75% of Australia's exports go directly to Asia. China accounts for the majority. When China's economy falters, they reduce imports from Australia, leading to a lower Australian dollar. Travel and education sectors are also taking a hit, as travel from China has stopped.
- Falling commodity prices: Australia's biggest exports, iron ore and coal are mostly exported to China. These commodity prices are plunging as demand falls, dragging the value of exports down. When commodity prices fall, the AUD also falls.
How do I forecast the AUD to USD rate?
Investors forecast the movement of the AUDUSD by looking at key influences:
- Central banks - Reserve Bank of Australia (RBA) and Governor Philip Lowe, and US Federal Reserve (the Fed or FRB) and Chairman Jerome Powell
- Interest rates - linked with central banks that control interest rates and monetary policy. Investors predict how central bank announcements on interest rate cuts or hikes, will affect interest rate spreads and currencies
- Local governments - Australian Government and Prime Minister Scott Morrisson, US Government and President Trump, UK's Brexit and Prime Minister Boris Johnson
- Australian economic data - Economic growth indicators (GDP), inflation (CPI Core Price Index, PPI Production Price Index), trade balance (balance between exports and imports of total goods and services)
- US economic data - GDP, trade balance and inflation
- China economic data (plus Hong Kong, Singapore, and rest of Asia) - GDP, trade balance and inflation
- Commodity price predictions - Australia's biggest exports include commodities like iron ore, coal, precious metals and agricultural goods
Should I trust bank forecasts?
The Australian dollar can change. A lot. So while banks have experts that spend long hours modelling future currency moves, there may be factors that aren't predicted.
Multiple factors influence currency movements that are both local and global. Plus, major bank forecasts are generated with a combination of computer modelling and human influence.
We recommend you don't make your exchange rate decisions based solely on bank forecasts, but rather, take into account your personal objectives, financial situation and needs.
Where can I find out more about AUDUSD?
You can find out AUDUSD exchange rates right now via the following services:
- In a money exchange service in-store
- Googling it online
- Use our exchange rate calculator for international money transfers
- or any number of currency converters or calculators online.
For more detailed information on where you'll get the best AUD to USD exchange rates, click here.
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.