The interest rate differential between the US and Australia is key to the movement of the Aussie this year.
In late January and again in May the AUD slipped below the key 0.70 USD mark, its lowest level since mid 2020.
However, AUD is widely expected to rise to US75¢ by the end of 2022 – the Aussie dollar is forecast to have a volatile year against a range of currencies.
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In mid May AUDUSD fell below the 69¢ level (it has since recovered back above 70¢), over escalating concerns over the Covid lockdown on Chinese companies.
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 February and March 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.
During April and May the pound-aussie rate improved back towards 1.78, but as we move through 2022 the prospect of more Australian interest rate rises sooner than expected could also boost the Aussie dollar vs Sterling.
The effect of Ukraine crisis on energy prices hurts the euro and helps the gas and oil exporting Aussie and have helped the AUD/EUR rate to rise back to 4 year highs trading around the 0.66 level (1EUR=$A1.5).
The euro has dropped 10 cents in one month and is down 2.7 per cent this year.
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 mid November into 2022 with AUD/NZD reaching 1.10 in May. The risk-off shift sparked by the Ukraine situation coupled with a hawkish Federal Reserve, seemingly impacting the Kiwi dollar more than the Aussie.
AUD/JPY reached 7 year highs at the start of May above 92 due to a weak yen and a strong rebounding Aussie dollar as the RBA raised interest rates, the first rise for a decade.
AUD/HKD has risen back to the 5.8 level since late January mainly due to AUD strength as Australia profits from energy prices hikes driven by the Russian invasion of Ukraine.
This strength stand in contrast to 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.