Australian Dollar Forecasts 2016 and 2017 from ANZ: GBP/AUD Back at 2.0 by End of Next Year

More strength from the Australian Dollar is forecast over the near-term but it should decline in value against the Euro, US Dollar and Pound Sterling through the course of 2017.

Those looking for their currency to strengthen against the Australian Dollar may have to be patient.

The latest projections for the Australian currency from ANZ suggest it should retain strength over the near and medium term but should ultimately weaken through the course of 2017.

For those watching the Pound to Australian Dollar exchange rate, you may have to wait until the end of 2017 before you see 2.0 on the spot markets become available once more.

Near-Term: AUD at Risk of Strengthening Further

An inactive Federal Reserve could be the prime driver of near-term Australian Dollar strength.

With US rates remaining low the potential for traders to further borrow in USD and invest in Australian debt remains high. This dynamic has been one of the long-term drivers of AUD strength, and looks set to remain so for some time.

“Hopes of a Fed hike in September look to have been dashed by data that was not strong enough, while near-term pricing of the RBA is also starting to look a bit stale given that we are still
five weeks away from the next CPI print,” say ANZ.

Resillient demand for commodities from China are expected to be another driver of AUD strength, as we note here.

ANZ say it is likely that the Australian domestic outlook could play a bigger role in the direction of the AUD once again, “and without significant disappointment, risks for the AUD are
to the upside”.

“Momentum is starting to pick up in the AUD crosses and so there is some danger that the AUD breaks higher,” say ANZ.

But ANZ believe valuation remains a concern for the AUD which looks too expensive and this will presumably lead to the longer-term softening the bank envisages.

Latest Pound / Australian Dollar Exchange Rates

	Live: 2.0112▼ -0.24% 12 Month Best: 2.1645
*Your Bank's Retail Rate	1.9428 - 1.9509
**Independent Specialist	1.9831 - 1.9911 Find out why this is a better rate

* Bank rates according to latest IMTI data.

** RationalFX dealing desk quotation.

 

Pound / Australian Dollar Forecasts

• December 2016: 0.61, GBP/AUD: 1.6394
• March 2017: 0.60, GBP/AUD: 1.666
• June 2017: 0.58, GBP/AUD: 1.7241
• September 2017: 0.53, GBP/AUD: 1.8868
• December 2017: 0.50, GBP/AUD: 2.0

Australian Dollar / US Dollar Forecasts

• December 2016: 0.76, USD/AUD: 1.3158
• March 2017: 0.74, USD/AUD: 1.3514
• June 2017: 0.72, USD/AUD: 1.3889
• September 2017: 0.70, USD/AUD: 1.4286
• December 2017: 0.60, USD/AUD: 1.6667

Euro / Australian Dollar Forecasts

• December 2016: 0.72, EUR/AUD: 1.3889
• March 2017: 0.70, EUR/AUD: 1.4286
• June 2017: 0.67, EUR/AUD: 1.4925
• September 2017: 0.64, EUR/AUD: 1.5625
• December 2017: 0.62, EUR/AUD: 1.6129

Employment Data to Sink Aussie Dollar Near-Term

While we ANZ point to near-term upside risks, others point in the other direciton.

The Australian dollar will be in play during the week starting 12th September with employment data due.

The market expects a decent gain of 15K new jobs on top of the 27K new jobs generated in July.

But according to the latest PMI readings from the Australian Industry group all three sectors - manufacturing, construction and services are deep in contraction territory having fallen by as much as -9.5 points in just one month alone.

“What's even more troubling is that employment sub-indexes of all three reports are well below the 50 boom/bust line suggesting that at very best the labor report next Wednesday will miss its mark, and at very worst could show a net job loss for the month.  As such, we expect further losses for AUD,” says Kathy Lien, Director at BK Asset Management in New York.