© Sonja Marten
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Basically, if we look at the current situation, we have fallen quite essentially from the highs that we witnessed during the summer, and I suppose there are two factors that have played into this. On one hand, the disappointment over the recent data that we have received from Australia and China, and on the other hand, the fact that we have a noticeably strong US Dollar. The Aussie has been hit by these two simultaneous developments. Thus, it is not just the strength or exceptionally weakness of Australian data.
Monetary policy has contributed as well, because there has been some disappointment over the prospects for rates in both Australia and New Zealand, which puts some pressure on the Aussie. However, we believe the currency has some potential to rise again. We anticipate the RBA to start hiking rates later in 2015. It is still a while away, but it is something what people do not currently have on the agenda. Thereby, we are definitely looking for the AUD to be stronger over the medium term.
What factors should also be considered as influential for the Aussie until the end of 2014?
There is the economic element, which is going to be quite important, since the market now is trying to judge the potential for growth and rates. And then there is of course the impact from China, which often has more influence on the Australian Dollar than on the Renminbi. As for instance the most recent disappointments in the country could influence future behavior of the Aussie.
What are your forecasts for the AUD/USD and AUD/JPY for the end of the year?
We predict the AUD/USD will trade around 0.88 by the end of the year. Talking about the AUD/JPY currency pair, we can see it reaching to 96 levels.