The AUD/USD gave 0.73 a kiss and then dipped a few points to 0.7285 as the greenback recovered after solid US data on Tuesday. The general market volume remains very soft with traders preparing for the New Year. With the currency now up 0.93% month to date, and 2.85% since December 17.
Confirming sentiment and technical will likely dictate the AUD performance today; there are no major data announcements scheduled across the Asian region.
Forecasters remain mixed on how the Australian and New Zealand economy will perform in 2016. Some expect the two currencies to perform well next year based on previous performance, but others believe they are poised to slide if policy makers push for cuts on the interest rates to spur growth.
2015 was challenging for the New Zealand dollar especially with rising unemployment at 6.2 percent and dropping GDP at 2.4 percent, according to Exchange Rates. Furthermore, the global commodity slump was also rough on the New Zealand dollar but this might change next year?
Risks include, the global scene, the weather, low export prices and deteriorating structural metrics, but there are reasons for cautious optimism as well. Reputable growth should see the unemployment rate start to fall again by late 2016, though questions remain over inflation dynamics,” ANZ wrote in its projection.
Nevertheless, Bloomberg did say that while the Australian and New Zealand dollars were measured among the worst performers among the developed countries, they were able to turn around as the best performers.
The recent non-performance for the Australian dollar in particular has been pushed by some reassessment of the pace of easing from the RBA with pricing changing from a near certain cut in 2015, to little chance of a cut for some time. It will be interesting in 2016 to see how this places out
Happy New Year.