Looking into AUD Pairs
FX traders should be keeping a close eye on the AUD during December, with the RBA announcement of interest rates today, keeping rates at 0.1%. Governor Lowe’s statement was of a generally positive tone, citing that recent Australian economic data has better than expected, the growth in employment, and the positive CVD-19 vaccine news. The RBA does not expect GDP data to recover to 2019 levels until the end of 2021, which is relatively quick a recovery. The AUD has been in a strong bull market since mid-march this year, and expectations are for this to continue.
Watching the AUD Closely
Westpac hold a AUDUSD end of year target at 0.7500, with forecasts at 0.8000 in 2021. The National Australian Bank (NAB) hold their 2020 end of year target at 0.7400, marginally above current price at 0.735. AUDUSD rates remained relatively stable in the Asia session after the rate decision and statement on the 1/12/2020, and the intraday resistance trendline was broken. Pictured is the 5 minute chart.
The Aussie-Kiwi has been cemented in a strong downtrend since the 18/8/2020, with NZD strength dominating FX markets. Forecasts for the NZDUSD from NAB set the E.O.Y target at 0.68, considerably down from the current price (around 0.7040). NAB also sees AUDNZD ending the year at 1.09, a considerable lift from current rates at 1.046. The increased appetite for risk spurred both AUD and NZD strength from mid-march, with the NZD outperforming. NZ Government recently proposed to the RBNZ to add housing prices to the Central Bank Remit, which spurred further NZD strength.
The AUD has come off its fresh yearly highs of 78.482 since the start of September, however AUD bulls seem to be back in control of the exchange rate. Currently trading around 76.8, NAB forecast the AUDJPY end of year rate at 78. NAB are extremely bullish the AUD compared to other leading Australian banks, with their forecasts surprisingly lower; CBA at 73.5, ANZ at 68.0, and Westpac at 70.35. The AUD shows very little signs of weakness however, with longer term forecasts predicting its strength.
GBPAUD rates have been in a tight range throughout November, as uncertainty with Brexit permeates all GBP pairs. GBPAUD traded to fresh 2020 lows at 1.74935 in early September and has recovered considerably since. Whilst analysts expect continued AUD strength over the coming 12 months there is still much uncertainty regarding GBP, with a no-deal Brexit expected to devalue the pound, and a trade-agreement Brexit likely to send the GBP on a bull rally.