Australian Dollar to USD & AUD to Euro forecast to march higher

The Australian Dollar continued its onward march against the US Dollar, Pound Sterling and other major peers on Friday and looks set to continue its ascent as the week draws to an end.

The ‘Aussie’ is likely to continue to advance its peers unless the Australian Central Bank intervenes or economists deem the recent run of gains as excessive.

The Australian Dollar to US Dollar (AUD/USD) surged beyond 92 US cents after it was supported by the prospect of no more interest rate cuts in the foreseeable future. A rise in commodity prices also supported.

“We did see a broad trend of rising commodity prices globally which tends to be supportive of commodity currencies like the Aussie Dollar, Canadian Dollar and New Zealand Dollar. I think generally, we’re just seeing this mood that’s been in place for a few days. It’s more of a broad trend rather than any specific trigger over night,” said a market strategist at Bank of New Zealand.

The Australian Dollar to Euro (AUD/EUR) exchange rate surged to a three-week high and could end the week even higher if today’s inflation reports from several Eurozone nations come in below forecasts. The single currency was also weakened by comments made by European Central Bank policy makers who hinted that monetary easing could be introduced to help the region’s weak recovery.

One thing that could soften the ‘Aussie’ are concerns that as the ‘Aussie’ continues above the 92c level exporters and importers will start to feel the effects and could prompt the RBA to intervene to soften the currency.

“RBA officials have been unwilling to ‘jawbone’ the Australian dollar lower, even though it has rallied in recent weeks, In our view this reflects that inflation has surprised them on the upside, so they cannot seek a lower Australian dollar until they know if the pick-up in inflation was temporary or not,” said HSBC’s chief economist Paul Bloxham.