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Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate Forecast to Dive as HSBC Cuts Australian Growth Forecast for 2015

June 26, 2015 - Written by John Cameron

Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate Dropped 0.5% On Friday

The Australian Dollar softened versus its major peers on Friday despite a complete absence of domestic data. The depreciation is the result of HSBC having cut forecasts for Australian growth in 2015 and predicted that the Reserve Bank of Australia (RBA) will hold the benchmark interest rate throughout 2016.

The New Zealand Dollar, meanwhile, declined versus most of its rivals thanks to dampened market sentiment amid geopolitical upheaval in Europe. The depreciation was somewhat slowed, however, thanks to better than expected Trade Balance which saw New Zealand’s deficit narrow.

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate is currently trending in the region of 1.1178.

Australian Dollar (AUD) Exchange Rate Forecast to Dive against the ‘Kiwi’ (NZD) as Gold Prices Cool

Gold prices weakened for the sixth consecutive day, weighing on demand for the ‘Aussie’ (AUD). Many analysts are unsure as to the direction of gold prices with so much rising on Greek geopolitics. ‘Gold hovered in a two to three dollar range for most of the day and continues to lack inspiration on either side of the market,’ Triland Metals said. ‘Whilst the sluggish activity is threatening lower prices it still feels that the market is now basing for its next big move.’

Also weighing on demand for the South Pacific asset was a report from HSBC which showed that they cut growth forecast for 2015 from 2.6% to 2.4%. This was due to expectations of a slowing Chinese economy and weak investment from domestic businesses. Additionally, HSBC economists predicted that the RBA would hold the cash rate in 2016 despite previously predicting two rate increases.

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate dropped to a low of 1.1159.

New Zealand Dollar (NZD) Exchange Rate Forecast to Hold Gains against the ‘Aussie’ despite Weak Market Sentiment

Geopolitical upheaval in Europe has had a significant impact on market sentiment, causing dampened demand for the high-yielding New Zealand Dollar. Trader risk-appetite is unlikely to resume until more is known about Greece’s future in the Eurozone.

Although market sentiment has caused the ‘Kiwi’ to decline, the depreciation was slowed by better-than-expected trade balance data. Year-to-date New Zealand Trade Deficit narrowed from -2656 million to -2570 million, despite prediction of widening to -2835 million in May. On the month, May’s trade balance advanced by 350 million; eclipsing predictions of a -100 million decline.

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate advanced to a high of 1.1230.

HSBC Forecast ‘Aussie’ Decline as China Slows and Investor Sentiment Fades

‘It's not so much a 'global savings glut' – as Ben Bernanke, the former chairman of the board of governors of the Federal Reserve once famously described it – but, instead a major shift in the preferences of savers in favour of a stable income stream. One consequence is less risk-taking. Another, by implication, is lower investment and, hence, weaker economic growth.’

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