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Analysts see the Australian and New Zealand dollars staying low, reflecting expectations of US dollar strength on wagers of higher inflation and interest rate in the United States. A Reuters poll of 51 analysts saw the Aussie slipping to $0.7400 in one month, from $0.7550 in the November poll, and a current reading of $0.7426.

The median prediction was for further modest losses to $0.7300 in three and six months and $0.7200 in one year's time. The Aussie has dropped more than three cents since the election of Donald Trump as the next US president and a near certain interest rate hike by the Federal Reserve in December.

Yet, the Aussie is still up 2 percent this year. Its resilience was partly due to a rebound in major export commodity prices, with iron ore futures traded in China up 50 percent since April. Coal has surged 65 percent this year. A major source of support for the Antipodean currencies is their relatively high yield amid ultra-easy monetary policy in most developed countries.

The Reserve Bank of Australia (RBA) holds its monthly policy meeting on December 6 and is seen certain to keep rates at 1.5 percent for a fourth month. Ten-year Australian bonds yield 2.8 percent against 1.5 percent in the UK and around zero in Japan. New Zealand bonds offer 3.3 percent, the highest in the developed world. New Zealand's fat yields likewise limited losses for the kiwi currency.

A poll of 43 analysts produced a one-month forecast of $0.7025 for the kiwi, compared to the current $0.7089. It was seen at 70 cents in three months, 69 cents on a six-month horizon and at 68 cents in one year. Like its Aussie cousin, the currency has dropped around three cents since the US election, but still defied bearish forecasts to be up nearly 4 percent so far this year. Also helping was upbeat economic data at home and expectations the Reserve Bank of New Zealand (RBNZ) was done cutting interest rates.

Copyright Reuters, 2016


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