The Forecast for the Australian Dollar in 2018
Volatility rocked currency markets in 2016, but stabilised in 2017 and ended the year even stronger than the “Big 4” banks anticipated. While the AUD was surprisingly resilient in January, most banks have since been lowering their AUD forecasts
to reflect recent declines.
ANZ made slight adjustments lower to its AUD forecast. It now expects the AUD/USD to rise to 82 cents by the middle of next year (78 cents
currently) before losing ground and finishing 2018 around 72 cents.
The Commonwealth bank upgraded its forecast for the Australian dollar 3 times so far this
year and is the most optimistic for a higher AUD in 2018. CBA sees the AUD consistently rising from 80 cents end of 2017 to 85 cents by the end of 2018. This is mostly based on their weaker USD view.
Even though National Australia Bank raised its Australian dollar forecast in 2018 , it is still
well below CBA and ANZ’s forecasts. The bank expects the AUD to end the year at around 75 cents and end 2018 around 73 cents.
Like the other banks, Westpac upgraded its Aussie dollar outlook , but is still the most negative in its 2018 predictions.
Westpac expects the AUD to rise to 76 cents by the end of Q4 2017 and 70 cents at the end of 2018.
While most forecasts vary, many agree on the influences on the local currency. Here are the main three:
1. Australian and US Interest Rates
2. Commodity Prices
3. Quantitative Easing in other western economies
How to Find the Cheapest Way to Transfer Money Overseas
Compare The Total Cost
The total cost of the transfer comes down to 2 things:
1. Transfer Fees
Every Australian bank and money transfer company will charge you a different fee to send money overseas. Usually it’s between $10 and $32.
2. Exchange Rate Margin
There is no “standard” exchange rate. Each bank will offer you a different exchange rate based on the currency you want to send overseas and the amount you need to send.
Money Transfer Comparison Tool
Weekly Update: Australian Dollar
Find out how the Australian Dollar has performed in the last week. These rates were correct at 11am 14.04.2018 AEST.
Will the Australian Dollar go higher?
The banks appear divided on how high the AUD will be trading by the end of the year. With the current exchange rate already trading above NAB’s and Westpac’s expectations, will they be following ANZ and CBA with another upgrade? And what could make the Aussie move higher?
There are plenty of possible reasons, but here are the 3 most likely:
1. The US economy slows down and their central bank fails to increase interest rates, pressuring the USD
2. The Australian economy picks up along with inflation, increasing the risk of interest rate hikes from the RBA
3. The Chinese government artificially stimulates its domestic economy, driving up demand for our commodities (and our dollar)
AUD Crosses Bank Forecasts
All of the banks see the AUD EUR rising near-term, but then declining mildly towards the end of 2018.
The National Australia Bank has raised its AUD EUR forecasts to end 2017 at 64 cents, which is a touch lower than the rest of the banks. NAB has end-2018 forecasts around 61 cents (or 0.6100).
Westpac is more bullish than NAB and is actually the highest of the 4 banks. Westpac estimates the AUD EUR to decline mildly to around 69 cents end of 2018, from about 73 cents at the end of 2017.
Our calculations show ANZ has the AUD EUR cross trading a touch higher than current levels by the end of the year at 68 cents, but then drops at the end of 2018 to around 64 cents.
Meanwhile CBA’s AUD EUR rate remains relatively flat according to our calculations, just above 66 cents by the end of Q4 2018.
Ongoing political uncertainties around Brexit and an economic slowdown for much of 2017 has meant that GBP is the most undervalued major exchange rate against the USD after the Japanese Yen. This is a key reason why the major banks have a flat profile for the AUD GBP in 2018.
NAB is expecting the AUD GBP to stay around 0.5700 next year. Meanwhile, CBA has its AUD GBP crossrate steady around 0.6200-0.6300.
All the major banks we looked at expect the AUD/NZD exchange rate to maintain recent gains leading into the new year. A recovery in Australian commodity prices and rising risk appetite are key reasons stated for recent strength in the AUD NZD cross rate.
In 2018, the outlook is dependent on movements in the US dollar and economic strength in Australia and New Zealand.
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.
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