AUD Could Fall As Low as 0.87 By Year End

Analysts are predicting further falls in the Australian dollar after the currency dropped dramatically over the past three weeks, falling almost six US cents, from 94 US cents to a near eight-month low of 88.18 US cents.

And the closer the US central bank gets to raising interest rates, which is expected to start in 2015, the lower the Australian dollar is likely to go.

The Australian dollar is expected to finish 2014 at 87 US cents, according to currency analysts. And they are forecasting a trading range of between 77 US cents right up to 95 US cents in 2015.

“The wheels are finally beginning to fall off the Australian dollar after a prolonged time at historically high levels,” a ThinkForex senior markets analyst, Matt Simpson, said.

He said the currency would trade between 77 and 85 US cents next year.

He said the Australian dollar typically traded around 70 to 80 US cents before the global financial crisis, after which it was considered a safe haven by investors who had previously never traded it, resulting in an inflated currency.

The Australian dollar has been considered attractive by investors because they can get high yields – among the best in the world – without higher risk.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza