The Australian Dollar is forecast to make further declines against the US Dollar as the year progresses as signs of a weakening economy, falls in consumer confidence and signs of US growth weigh.
According to Goldman Sachs the AUD to USD Exchange Rate is showing signs of shifting in favour of the US currency as recent data releases suggest that the Australian economy is showing signs of a slowdown after disappointing GDP figures for the first quarter of the year.
Expectations that the Reserve Bank of Australia will raise interest rates in the next year fell to 25% on Friday. Last week expectations were at 50% ahead of the release of the budget.
The Central Bank changed its ‘Aussie’ forecast; it now expects the currency to hit $85 cents by the end of 2014 instead of the $84 cents in its previous forecast.
“The RBA continues to send the message that rates are on hold for an extended period, but in the May Board Minutes our Australia economist Tim Toohey and team sensed a slightly more cautious tone in some respects. The activity/survey data continued to soften, consumer confidence fell sharply, and commodity prices continue to soften we expect a rate cut as early as July,” said the report released by Goldman Sachs.
The ‘Aussie’ is experiencing muted movement today ahead of the release of US new home sales data. A decline in iron ore prices also weighed.
Due to positive data coming out of the USA in recent days investors have raised their bets that the ‘Aussie’ will make its first monthly decline since January.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar,0.9225 ,
Australian Dollar,,Pound Sterling,0.5475 ,
Australian Dollar,,Euro,0.6780 ,
Australian Dollar,,New Zealand Dollar,1.0793 ,
US Dollar,, Australian Dollar ,1.0840 ,
Pound Sterling,, Australian Dollar ,1.8253 ,
Euro,, Australian Dollar ,1.4764 ,
New Zealand Dollar,, Australian Dollar ,0.9265 ,
[/table]
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