AUD to USD Forecasts in 2020 from Major Australian Banks
The AUD has certainly changed course since March. Uncertainty and fear about the coronavirus pandemic had driven the Australian dollar to over 18-year lows below 58 cents only to spike back up again past 72 cents.
The AUD/USD is even higher than this time last year, but a lot of it is being driven by a very weak US dollar and rising commodity prices. The US dollar fell to over two year lows recently.
The 'Big 4' banks have increased their latest Aussie dollar forecasts. Banks anticipated a weaker Aussie dollar in 2020 with just a minor uptick by the end of the year. However, they are now raising their expectations for a stronger increase around 75 cents.
How does the coronavirus pandemic affect exchange rates?
Uncertainty from coronavirus 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. What's happening now is the USD is surprisingly falling in conjunction with a rise in commodity prices. This could mean a number of things including that confidence may be returning for the global economic outlook.
The bad news is rising coronavirus cases and a severe lock-down in Victoria will still be a drag on Australia's economy, despite government stimulus.
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Aussie dollar long term prediction in 2021
We know what the banks are predicting for the AUDUSD in 2020, but what do they think will happen in 2021? It looks like the AUD/USD trend is generally expected to rise.
For the latest look at these forecasts, read our AUD to USD Forecasts for 2021.
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
AUD to USD
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 particularly in Melbourne. 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.
Will the Australian dollar rise against the USD?
There are many reasons the Aussie dollar keeps falling, including:
- United States currency (USD): When the US dollar falls, the Australian dollar rises. This is because the AUDUSD is a currency pair. The US dollar is falling so the AUD is up.
- 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. There is hope that Australia will have better control of coronavirus, which will be good for the Australian dollar.
- Australian economy: The Reserve Bank of Australia (RBA) cut the cash rate by 0.50 earlier this year to 0.25% to help support a softer economy. A weak economy usually leads to a lower Aussie dollar. But this is being offset by the falling US dollar and rising commodity prices.
- 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.
- Rising commodity prices: Australia's biggest exports, iron ore and coal are mostly exported to China. These commodity prices are improving as demand recovers, pushing the value of exports up. When commodity prices rise, the AUD also rise.
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.