Is the AUD/USD exchange rate running out of steam?

In short

1. The AUD has lost ground to the USD looking exhausted
2. The AUD/GBP bounces higher after weeks of falling
3. No major Australian economic data out until inflation (CPI) next week

Looking at the forecasts from the biggest banks in Australia, the Australian dollar is expected to fall further this year. The average bank forecast has the Australian dollar falling at least another 3-5% from its current rate above 68 cents.

The AUD/USD has now improved nearly 3% since the start of October when it hit a 10 year low below 67 cents.

While bank forecasts change all the time, the outlook for the Australian dollar has been negative for most of the last 2 years. This is because

• The Australian economy has not been as strong as the US economy
• As a result, interest rates are lower than the US, pressuring the AUD/USD lower
• Australian interest rates have been falling faster than in the US