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AUD: The 65-75 cent currency for 2016 – BNZ

FXStreet (Delhi) – Research Team at BNZ, believe that Australian dollar is likely to hover in between the range of 65-75 cents against its US counterpart through 2016 after the AUD's recent recovery has come alongside a smart recovery in Asian EM currencies and a generally softer US dollar this far in October.

Key Quotes

“We continue to forecast 70 cents for year-end, partly in anticipation of renewed market volatility out of the 17 Dec FOMC - whatever the outcome.

“We are comfortable continuing to describe the AUD as a ’65 to 75 cent currency’ for almost as far ahead as the eye can see (through 2016 at least), but remain reluctant to forecast the spot rate being as low as 0.65 or as high as 0.75 on any of the quarter-end dates for which we publish forecasts.”

“On the downside, our forecast for the expected cycle-low on AUD/USD remains at 0.68 for H1 2016. This largely reflects our expectations for a modestly stronger US dollar either side of year-end, and contagion effects from an expected resumption of CNY depreciation and broader pressure on Emerging Asia currencies in 2016 - to which the AUD remains very highly correlated.”

“Moves below 0.68 are likely to require a combination of a much more pronounced - and extended - bout of market risk aversion (say following an initial Fed rate hike) and the RBA coming back to the easing table, neither of which we currently anticipate.”

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