Australian importers and exporters continue to accurately forecast the Australian dollar-US dollar (AUD/USD) exchange rate, according to the latest quarterly Aussie Dollar Barometer research East & Partners.
The banking market research and analysis firm says that despite growing geopolitical unrest, inflationary pressure, unpredictable US Federal Reserve policy and heightened risk of yet another Argentinian sovereign debt default, Australian trading businesses continue to be “on the money” with their foreign exchange (FX) forecasts.
The barometer is based upon direct interviews with 869 internationally trading enterprises, their upcoming AUD/USD rate expectations, hedging plans and total FX exposure.
In November 2013 Australian exporters and importers predicted an AUD/USD rate of 0.922 by June 2014. Over six months later the forecast fell close to one basis point of the actual June 2014 monthly average of 0.936. The latest forecast is for a steady AUD/USD rate of 0.943 in the third quarter of 2014, before falling to 0.935 in Q414.
East says that the Reserve Bank of Australia (RBA) continues to state a clear preference for a lower Australian dollar to the benefit of exporters who find themselves increasingly uncompetitive against international peers.
It adds that the consistently dovish tone by US Federal Reserve chair Janet Yellen remains an impediment to renewed USD strength however, limiting the perceived downside risk of an outright correction in the AUD/USD that would see the currency pair decline towards the 2014 low of 0.866. Any shift away from the current rhetoric could see a swift change in this underlying sentiment however.
Exporting only enterprises predict the AUD will remain relatively well supported against the USD through to the end of September, expecting the AUD to remain range bound near its current rate of 0.936 before falling to 0.897 in Q215.
Importing only enterprises are content to trust in steadying commodity prices and a preferential interest rate differential that has effectively propped up the AUD via considerable capital in-flows in recent months. Importers forecast the AUD/USD to trade over one basis point higher at 0.949 by the end of September.
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