The outlook for the Australian dollar for the rest of 2022 is positive thanks to optimism over commodity prices, and will also be bolstered further by the eventual end of the massive US dollar rally.
ANZ Bank forecast the AUD to regain some ground by the end of the year to US70¢.
While NAB see the Aussie dollar to be range bound between US65¢ to US70¢, testing the lower end at the some point through to the end of the year.
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AUD was widely expected to rise to US75¢ by the end of 2022 but many forecasters are curbing their optimism and cutting their predictions.
That said, the Aussie was always forecast to have a volatile year against a range of currencies.
As predicted, the AUD’s traditional vulnerability to risk has left it exposed to a broader correction in late September.
CBA have lowered their forecast for the Aussie to fall to US62¢ by December as the slow down in the Chinese economy hits the price of many of Australia’s key commodity exports.
The Aussie dollar is a proxy in the markets for risk appetite, so AUD tends to go up and down depending on how confident traders are about growth prospects for the world economy.
Australian dollar exchange rates are especially sensitive to news about China due to the two countries strong trade ties. Any increase in Chinese construction creates demand for iron ore, this is positive for AUD being Australia’s major export commodity.
The following sections show a summary of forecasts for popular AUD cross rates for BER users, you can view each forecast article for more details.
In the first quarter the GBP/AUD exchange rate dropped on the impact of the Ukraine situation on commodity prices — this was good for AUD and bad for GBP.
Since then the pound-aussie rate has fluctuated around the 1.76 level (1 AUD = 0.56 GBP), but as we move through 2022 the prospect of more Australian interest rate rises sooner than expected could boost the Aussie dollar vs Sterling.
Due to the Eurozone’s reliance on gas from Russia, the euro remains vulnerable with AUD/EUR at a 5-year High in August near 0.70, whereas it had been approaching 0.60 in early February before the start of Putin’s so called Russian ‘special miliary operation’ in Ukraine.
AUD/SGD hit a recent peak of 1.03 in early April but the Aussie/Sing dollar rate has since dropped to below 0.96 as optimism goes missing around China’s COVID policies.
Before this latest blow, commodity-linked currencies such as the Aussie dollar had been moving up as Russia’s tragic actions in Ukraine push up demand for oil and other natural resources.
The NZD has dropped back relative to AUD from 1.04 in late 2021 with AUD/NZD reaching 1.11 in June.
The risk-off shift sparked by the Ukraine situation coupled with a hawkish Federal Reserve, seemingly impacting the Kiwi dollar more than the Aussie.
In the second half of 2022 the Aussie to yen rate is still near multi year highs due to a weak yen and a strong rebounding Aussie dollar as the RBA began to raise interest rates, the first rises for a decade.
Markets are split on whether or not to expect the AUD/JPY rate to continue heading towards the 100 level.
Mid-year the AUD/HKD has fallen back to the 5.4 level mainly due to USD strength (HKD is fixed to USD).
Earlier in the year AUD/HKD had risen to 5.8 as Australia profited from energy prices hikes driven by the Russian invasion of Ukraine.
This resumed weakness matches last year when the Aussie dollar saw a long slide against the HK dollar due to AUD weakness against the US dollar.
In May, the Aussie dollar has weakened against the Indian Rupee, dropping below 54₹.
Earlier in 2022 AUD had been strengthening against the Indian Rupee, passing the 57₹ threshold, in March as the tragic situation in Ukraine worsened.
Australians are more focussed on their currency exchange rate than are the citizens of most other countries! Read why in our Foreign exchange guide to Australia.
Disclaimer: Please note any provider recommendations, currency forecasts or any opinions of our authors should not be taken as a reference to buy or sell any financial product.