Forecasts for AUD to USD
According to recent exchange rate forecasts by major banks and analysts, the outlook for the AUD to USD exchange rate appears to be bearish. The Australian dollar has been downgraded by major banks due to the failure of expected improvements in Chinese demand for iron ore and a softer US dollar. National Australia Bank (NAB) projects a chance for the AUD to go as low as US62¢, while Commonwealth Bank of Australia (CBA) admits that it could potentially drop below US60¢.
The Australian dollar is heavily influenced by factors such as commodity prices, trade policies, and political developments, particularly since Australia is a major commodities exporter. The AUD is also considered a proxy for risk appetite in the markets, so its value tends to fluctuate based on traders' confidence in global economic growth prospects. Any increase in construction and iron ore demand, especially from China, would be positive for the Australian dollar. However, a weakening AUD is expected as investors shift their capital to higher-yielding currencies like the US dollar, which could further drive up the cost of imported goods.
In contrast, economists expect the strength of the US dollar to eventually reverse as the Federal Reserve's interest rate hikes cycle comes to an end in 2023. Recent AUD to USD price data shows the exchange rate trading at 14-day highs near 0.6475, indicating a 1.2% decline compared to its three-month average of 0.6551. The AUD to USD exchange rate has been fairly volatile, trading within an 8.4% range between 0.6353 and 0.6887.
Overall, based on recent analyst forecasts and market data, the AUD to USD exchange rate is expected to face headwinds in the short term due to downgraded forecasts, weak Chinese demand, and a potential shift in investor capital towards higher-yielding currencies. However, the US dollar's strength is also anticipated to reverse in the coming years as the Federal Reserve's rate hikes cycle concludes.
