Australian Dollar Forecasts vs Sterling, US Dollar and Euro Through to End-2014

Pound Sterling Live take a look at the likely direction the Australian dollar exchange rate complex is likely to adopt as we move towards the end of 2014 and early 2015.

On Wednesday we see the AUD has failed to recover meaningfully from comments made by the Reserve Bank of Australia's Lowe who said the economy needs a lower A$.

Markets see this as an indication that the RBA could be willing to intervene in the markets where necessary to keep the currency weak. At the very least it reminds traders that they are backing a currency that is expensive.

The declines are deep and fall in line with longer-term trends in place for much of 2014.

Australian Dollar Today

At the time of this article's most recent updated we see the following AUD spot points:

1. The British pound to Australian dollar exchange rate (GBP/AUD) is at 1.8420.
2. The euro to Australian dollar exchange rate (EUR/AUD) is at 1.4680.
3. The Australian dollar to US Dollar rate (AUD/USD) is lower at 0.8484.

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Keeping sentiment on AUD weak is RBA deputy governor Philip Lowe says he sees the Australian dollar as being expensive.

"If the exchange rate is to play its important stabilising role, it needs to go down when the terms of trade and investment are declining, just as it went up when the terms of trade and investment were rising," Dr Lowe told an Australian Business Economists event.

"To date, as we expected, we have seen some adjustment, but if our assessment of the fundamentals is correct we would expect to see more in time."

Pound vs Australian Dollar Forecast

The GBP/AUD exchange rate appears to be caught in a downtrend despite a recent climb higher back above the 1.84 level.

As the below image shows, a channel heading lower has been in place since resistance to further upside moves was struck at the end of October. A November rally failed to make significant advances confirming a downward bias at this stage:

We see little reason to doubt further declines with a move towards the mid 1.70's being on the cards. We would however need to see the current Aussie weakness fade if the current forecast is to remain valid.

Beware, volatility and volumes have picjed up since summer ensuring that moves either side of the channel can be large and potentially dangerous for those keeping an eye on this pair in the foreign exchange markets.

Australian vs US Dollar Forecast: AUD Strength is Countertrend

Don't bet on any sustained strength in the AUD/USD warns a new note from Swissquote Bank that seeks to predict the Aussie's next moves.

Technical forecasters Luc Luyet at Swissquote tells us:

"AUD/USD's recent strength continues to be seen as a countertrend move. A break of the short-term rising trendline would strengthen this outlook. A resistance stands at 0.8747 (18/11/2014 high, see also the declining trendline). A support lies at 0.8541.

"In the long-term, the break of the strong support at 0.8660 (24/01/2014 low) confirms the underlying long-term bearish trend and opens the way for further weakness. Supports can be found at 0.8316 (01/07/2010 low) and 0.8067 (25/05/2010 low). A key resistance stands at 0.8911 (29/10/2014 high).

However, the nearer-term outlook could see the AUD eke out further climbs suggests Axel Rudolph at Commerzbank:

"AUD/USD’s descent from last week’s high at .8795 took it to .8567 on Thursday before it reversed its short term trend slightly above the current November trough at .8542.

"The three month resistance line at .8735 should soon be sliced through with the mid-November high and the 55 day moving average at .8795/97 then being in focus. Key resistance remains to be seen at the October high at .8911. Risks are on the downside while trading below there.

"The .8542 support level guards the base of the 3 year channel at .8411."

Commerzbank confirm they are advising speculative traders to buy the AUD/USD pair at .8630 ahead of an extension of the rebound.

Euro vs Australian Dollar Forecast: End of the 'Wild Ride'

Turning to the EUR/AUD pairing Jim Langlands at ForexTell says he fancies the euro's chances against the Australian currency:

"EURAUD had a wild ride last week,  and after rallying sharply from 1.43 00 to a high of 1.4630,- where it ran into trouble with the 200 DMA-, it fell like a stone on Friday to finish just above the weeks lows of 1.4245.

"It looks though this range could continue to cover the cross in the short term, and buying dips near the range low may not be a bad thing, with a SL (and possible reverse – to go short) placed below 1.4200.

"A break of this would head towards 1.4140 and possibly to 1.4000. The topside currently looks confined to 1.4370 (200 HMA), but a break of which, would take us back above 1.4400 and back into the higher end of the range, and potentially for another look at 1.4600."