Australian Dollar Projections: AUD vs the Euro, Swiss Franc and Canadian Dollar

UBS have updated their forecasts for the Aus dollar against CAD, EUR and CHF.

Before we look at the forecasts from the UBS currency team, here are the latest Australian dollar rates for reference:

• The Australian dollar to Swiss Franc exchange rate (AUD/CHF) is at 0.8223.
• The euro to Australian dollar exchange rate (EUR/AUD) is at 1.4640.
• The Australian to Canadian dollar exchange rate (AUD/CAD) is at 0.9725.

Be Aware: All currency quotes seen here are taken from the spot market - your bank will subtract a spread at their discretion. However, an independent FX provider will guarantee to undercut your bank, thereby delivering up to 5% more currency in some instances. Find out how.

The below forecasts come courtesy of UBS.

Australian Dollar to Swiss Franc Exchange Rate Forecast

Choppy sideways range has developed in AUDCHF since early October, between 0.8195/8203 to the downside and 0.8454/88 to the upside.

"This week’s sharp decline is breaking the lower extremes of that range; if confirmed on a closing basis, it would mark an outright bearish shift in sentiment, exposing AUDCHF to further prolonged decline.

"The weekly chart confirms the bearish potential, as both momentum and trending indicators look set to give new sell signals on Friday.

The weekly MACD is threatening to break under its zero line to reflect a new long-term bearish trend at the same time as momentum is poised to cross lower, suggesting downside acceleration.

"A close below 0.8195 would trigger a number of bearish signals, opening the way to a break of 0.8112, the April 2012 low, and then 0.7718, the January 2014 extreme. Sell AUDCHF on a close below 0.8195, targeting 0.7725, with a stop at 0.8350, just above the 62% retracement of the latest selloff."

Euro to Australian Dollar Forecast 

"This week’s sharp advance in EURAUD is testing resistance at 1.4557 and 4712, respectively the 38% retracement of the January-to-September selloff and the October high.

"Breaking this area would be an important technical development, as it would also put the weekly MACD back above its zero line, confirming a new bullish trend. A close on Friday above 1.4712 would suggests a swift break of the 62% retracement level at 1.5057 and open the way to 1.5838, the January 2014 rejection level. Buy EURAUD on a weekly close above 1.4712, targeting 1.5800, with a stop at 1.4450, just under the midpoint of this week’s range."

Australian Dollar to Canadian Dollar Projections

"Important AUDCAD support at 0.9632, the 62% retracement of the July 2013 to April 2014 bull move, has given way this week. Confirmation on Friday would be outright bearish, as the weekly MACD is already below its zero line, and momentum below its moving average.

"A weekly close below 0.9632 would expose the cross to at least 0.9407, the December 2013 low, and likely the July 2013 extreme at 0.9185. Sell AUDCAD on a weekly close below 0.9632, targeting 0.9200, with a stop at 0.9755, just above the midpoint of the latest selloff."

ANZ Bank Cut Growth Forecasts for Australia

Australia's ANZ have confirmed they are lowering their expectations for the performance of the Australian economy in the year ahead.

The cut in expectations will likely impact the Aussie rate negatively.

In a note to clients ANZ Research say:

"We have revised down our growth profile for Australia, and now expect slightly softer growth in 2015 and 2016 of 2.9% and 3.2% respectively. This new forecast incorporates recent sharp downward revisions to our iron ore price forecast, and has seen us take around 1ppt off our nominal GDP forecast and around ¼ppt off real GDP growth.

"Taking into account the impact of these interest rate revisions, ANZ Research estimates that fair value for the AUD is about USD0.79.

"Despite this, we maintain our USD 0.82 forecast for end-2015 and believe that either a rate hike from the US Federal Reserve, or a further step down in key commodity prices would be a more compelling trigger to further downgrade our forecasts."