Australian dollar forecasts remain bearish; AUD sees fresh losses vs pound sterling on Tuesday morning

By Sam Coventry

Australian dollar exchange rates (AUD) are today under pressure once more and a roundup of the latest Aus dollar forecasts suggests the currency will likely come under further pressure.

With the latest batch of Chinese data portending a further consolidation/moderation of Chinese growth prospects, the AUD may remain asymmetrically susceptible to further data disappointments.

"Ahead of the CPI numbers due later this week (with last week’s disappointing Australian labor market numbers expected to remain a drag), we reinstitute a short AUD-NZD (spot ref: 1.0659) on Monday targeting 1.0460 and place a stop at 1.0760," says Emmanuel Ng at OCBC Bank echoing a host of negative-AUD positions currently at play in the global FX marketplace.

Aus dollar exchange rates today

• The pound sterling to Australian dollar exchange rate (GBP/AUD) is trading 0.34 pct higher at 1.8714.
• The euro to Australian dollar exchange rate (EUR/AUD) is 0.15 pct higher at 1.5406.
• The Australian dollar to US dollar rate (AUD/USD) is 0.26 pct lower at 0.8788.
• The Aus dollar to New Zealand dollar (AUD/NZD) is 0.1 pct lower at 1.0576.

Note: Our AUD quotes are taken from the wholesale spot markets. Your bank will charge a spread at their discretion when passing on a retail rate. However, an independent FX provider is so well placed on the market that they are able to deliver you up to 5% more currency. Please learn more here.

Australian dollar exchange rate action over the past 24 hours

Chinese GDP data helped the Aussie to curb sterling gains, but this was short-lived and currently the pound has regained control in anticipation of the IMF statement, as well as unemployment figures due tomorrow.

"The market is also eyeing Australian inflation data due to be released in the early hours of tomorrow morning. With another rate cut from the RBA still an option, it will be interesting to see how the inflation figures affect the central bank’s stance. For now, we expect the pound direct the rate higher, reversing yesterday’s losses," says Sasha Nugent at Caxton FX.

Outlook for pound sterling vs Aus dollar

While Friday’s UK retail sales numbers were much stronger than expected, it is no big surprise that they haven’t led to more sustained GBP gains, as the Q4 retail sales outcome was still only a rise of 0.4%, and there is no necessary implication for Q4 GDP.

Even so, analysts at Lloyds Bank Research still see some value in GBP on a dip vs the likes of the Australian dollar. "The strength of UK growth and the declining trend in unemployment does suggest the possibility of a steady widening of yield spreads in favour of the GBP," say Lloyds Bank.

There will be interest in today’s CBI industrial trends survey for any indications on the momentum of the economy in January, but the focus will mainly be on tomorrow’s labour market data.

"A dip in the unemployment rate to 7.3% would provide further support to the GBP bull case. We would not expect anything from the MPC minutes to discourage this at this stage," say Lloyds.

Forecasts for the AUS dollar vs US dollar exchange rate today

"The AUD/USD has ticked modestly higher to start this week’s trade after dropping to a new multi-year low late last week. The slightly stronger-than-expected economic data out of China has lent some support to the pair, though the tentative reaction underscores the bulls’ caution.  Moving forward, the bias has to remain generally to the downside under the .8840 level, and we will watch for sell opportunities on bounces toward that level in the early part of this week," says an Aus dollar forecast issued by GFT.

ICN Financial have told clients that they are short on the Aus / US dollar rate below 0.8835 with targets at 0.8770 and 0.8735. Stop loss above 0.8890:

"The pair extended the upside pullback towards the broken support area, which turns to a resistance now among 0.8820-0.8850, where we expect the price to resume the bearish wave after testing that area. Holding below 0.8850 is required for price maintains the bearish bias; a break above the latter may extend corrections a bit deeper."