Aus Dollar Forecasts: Where Next for AUD vs the Pound, Euro and US Dollar?
- Written by: Will Peters
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Week-ahead and month-ahead forecasts for the Australian dollar (AUD) against the British pound, US dollar, euro and NZDollar.
The Aussie dollar has suffered choppy trading conditions through October as a deep market correction and fall in oil prices introduces heightened volatility to global markets.
The flow of cash back to the United States in anticipation of US Fed interest rate rises has hit higher-yielding currencies like the Aus dollar particularly hard.
For reference, the Australian currency is on the front-foot As Chinese economic data pleases the markets:
- The pound to Australian dollar exchange rate (GBP/AUD), 0.35 pct lower @ 1.8338.
- The euro to Australian dollar exchange rate (EUR/AUD), 0.03 pct lower @ 1.4568.
- The Australian to US dollar exchange rate (AUD/USD), 0.26pct higher @ 0.8807.
- The Aus to New Zealand dollar rate (AUD/NZD) @ 0.13 pct lower @ 1.1011.
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Pound vs Australian dollar forecast
The pound sterling is starting to find its feet once again with support being witnessed against the dollar and a strong recovery being witnessed vs the euro.
This positive action has also been reflected in GBP/AUD with the currency pair dipping below support at 1.82 only momentarily confirming to us just how solid this level is.
This week we watch for sterling/aussie to break through support at 1.84 - this immediately opens up the possibility for a test of resistance of 1.86.
Aus vs US dollar forecast
The bear-trend in AUD/USD is slowing in line with the broader US dollar decline.
"Trend momentum has weakened on the short-term studies but the absence of a major bounce and the pattern of trade over the past three weeks suggest that risks are skewed to the downside and a resumption of the bear trend below support (neckline trigger) at 0.8660 now," says Shaun Osborne at TD Securities.
Osborne notes that AUDUSD is steadying right at the January low so a rebound should not be entirely dismissed as a risk but recoveries have struggled to hold.
"Below 0.8660 targets the low 0.85 area (50% retracement support from the 2008/2011 rally) but an extension lower could extend to the channel base at 0.8430 overall," says Osborne.
Aus vs NZ dollar forecast
The AUDNZD remains trapped within a well-defined 1.09/1.13 range; "we think a push above or below the recent extremes should drive a significant move (around four big figures) in the cross in the direction of the break. But it is not clear that a break is coming any time soon," says Osborne.
AUDNZD has retained a softer undertone over the past week but TD Securities think support in the low 1.09 area should be solid in what is a low momentum environment at present.
"On the face of it, price action and the sideways consolidation after the rally from the low 1.06 area is setting the market up for an eventual topside break," says Osborne.
Euro to Australian dollar forecast
Has the euro seen the worst of its declines against the Aussie dollar?
A recent correction lower in EUR/AUD ran into support at the start of October and the resultant rally appears to have legs.
"The rebound in the EUR leaves the market nudging up against important resistance at the end of the week. Trend resistance at 1.46 off the early August/late September highs looks a lot like the neckline of an inverse Head & Shoulder base," says TD's Shaun Osborne.
"Trend momentum is strong on the short-term studies but more equivocal on the longer-term chart. Short-term risks seem to favour more gains towards 1.48," says the analyst.
