The Australian dollar has had a fantastic run against most of the G10 currencies is recent weeks as the Reserve Bank of Australia changed their tune in regards to interest rates. For example, AUDGBP exchange rates have increased from 0.5570 to 0.5805 in just over 4 weeks.
Looking ahead, experts seem to be disagree whether the Australian dollar will continue to surge against the G10 currencies or fall in value throughout 2018 and there are strong arguments either way.
Economists from Commonwealth Bank, UBS and optimistic that it will be a good year for the Australian dollar as they believe now is the start of a considerable downward trend for the US dollar which will help the value of the Australian dollar. Furthermore the Commonwealth Bank and UBS believe commodity prices will do well this year which will continue to help the Aussie and an interest rate hike for the RBA will occur at some point in quarter 1 or 2.
However on the other hand Morgan Stanley expect the complete opposite. They predict that the Fed will continue to raise interest rates however the RBA won’t raise rates until 2019 which will mean a major sell off of Australian dollars in order to buy US dollars will occur. Furthermore Morgan Stanley and Westpac disagree with the forecasts that commodity prices will have a good year. They are predicting a major slow down for China which in turn will mean iron ore prices will fall.
It is quite clear to see that it is impossible to predict the Australian dollars future at present as we are unsure if the RBA will raise interest rates and when this will occur and also the future of commodity prices. Therefore if I were exposed to Australian dollar conversions for the time being I would continue to monitor these developments and also look into the other currency that you would be converting. For example Brexit negations will drive GBPAUD exchange rates and Donald Trumps twitter account coupled with the Feds stance will dictated USDAUD exchange rates.
If you are buying or selling Australian dollars in the future, I would strongly recommend getting in contact to discuss your situation. The company I work offers a proactive service to offering economic information whilst having the ability to offer award winning exchange rates. Feel free to email me with the currency pair you are converting, your requirements along with the timescales you are working to and I will respond with my forecast and the process of using our company [email protected].