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AUD/USD Forecast at $0.75 in 3 Months’ Time; Potential for Extreme AUD/GBP Moves on Wednesday

The Australian dollar has offered broad stability in recent days—a welcome change from last week’s sharp decline. The Aussie will likely trade higher over the coming months, Goldman Sachs has said, although anything goes for AUD/GBP on Wednesday as a vote of no confidence in the British Prime Minister takes place.

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Australian Dollar News and Forecasts

The Australian dollar continues to hold its ground against the US dollar at or near $0.72.

Australian dollar bulls watched unhappily last week as the currency fell quickly away from $0.74 following the release of disappointing economic growth numbers and as traders chose safer assets amid a sell-off in global equity markets.

Against the New Zealand dollar—by far the best performing major currency since November 1st—the Aussie continues to rally away from Monday’s long-term lows; it traded during Wednesday’s Asian session as high as $N1.0528.

Against the British pound, like everything else, the Australian dollar has done extremely well of late; although, at £0.574, it remains down slightly on Monday’s 11-month high of £0.581.

Readers be warned, there is potential for AUD/GBP to skyrocket on Wednesday evening should Conservative Party members declare no confidence in British Prime Minister Theresa May, or fall should she receive party members’ backing. It was announced on Wednesday morning that May must face a same-day vote of no confidence—scheduled for 18:00-20:00 GMT—after 48 members of her party submitted no-confidence letters to the head of the 1922 committee.

Speaking on Tuesday on the Australian dollar’s trade-weighted valuation was a researcher at Singapore’s third largest bank, UOB, who said that the currency’s recent decline had “run ahead of itself” and that higher prices should be expected over the coming days.

Over the longer term, too, Australia’s currency appears to be ripe for appreciation.

In the view of Goldman Sachs, recent dovish comments from RBA Deputy Governor Guy Debelle “should be taken in the context of a speech dedicated to the policy response to the 2008 financial crisis rather than a signal on future policy direction,” and furthermore, much of the weakness seen in recent economic data “should prove temporary.”

“With a partial cut [to Australian interest rates] now priced into the curve . . . the risk-reward is favorable for AUD higher on a stabilization of both China data and the Chinese yuan,” GS argues.

GS expects to see AUD/USD at $0.75 in 3 months’ time.

 

Further Reading

 

Disruptors Challenging Australian Banks in Forex Price and Service: ACCC Report

Key Takeaways from the ACCC inquiry into currency conversion services. BestExchangeRates referenced among comparison sites playing an important role in customer awareness of the excessive currency margins charged by banks.

Last update: 1 Oct, 2019

AUD/GBP Between a Rock and a Hard Place – USD Strength

AUD/GBP versus AUD/USD and GBP/USD

Both the Australian dollar and British pound sterling have had a hard time of late caught between the rock of the China/US trade war and the Brexit hard place.

Last update: 27 Aug, 2019

Australia Cuts Interest Rates to Record Low

RBA Australian dollar AUD currency news and forecasts

The RBA has cut Australian interest rates to a record low of 1 percent in an effort to boost inflation. The Australian dollar is slightly stronger following the widely expected decision but is expected to lose 5–7 percent of its value before year-end.

Last update: 14 Aug, 2019

  

Posted to: News

 
 
Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.
 

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