The Australian Dollar has finished 2015 and started 2016 comfortably above the USD 0.70 mark, a bit of a psychological figure that traders are looking to and markets are expecting to be broken throughout this calendar year. After the US Federal Reserve hiked rates in mid December experts were expecting to see the USD shoot up in value, however traders have not seen it that way and if anything it was the real non-event of 2015.
The AUD finished the year as one of the top performing currencies sitting at a 3 week high against the USD, finishing the year around the 0.73 cent mark. It also finished the year extremely strongly against the GBP ending the year at a 6 month high in the 0.49p range. The GBP was flying through 2015 reaching a high of $2.24 against the AUD in August before closing out the year at $2.02, after downgraded GDP and struggling inflation figures in the back half of the year led the BoE to mention putting off any interest rate increases until 2017, that’s had a slow but negative effect of the GBP.
The AUD/EUR finished at a 1 month high back trading in the 0.67’s. After a very turbulent year for the EUR, with the Greece crisis hogging most of the headlines, it also seen a huge refugee crisis which is expected to put a heavy strain on the EUR as a whole. 2016 will see the UK hold a referendum in regards to their position in the Eurozone, so expect another year of volatility in this area.
The AUD/CAD after reaching a low of 0.91c in September this year has gone on a spectacular run and is now above the $1.00 mark for the first time in over 16 months. The collapse in Oil, a sluggish economy and low energy prices have seen the CAD fall heavily this year and ScotiaBank analysts expect that trend to continue throughout 2016.
The only currency that the AUD finished down against was the NZD which finished at a 1 month low at $1.06 after seeing highs of $1.10 at the start of December. A strong NZD came despite a rate cut on December 8th after talk of a positive outlook for inflation moving forward.
Starting the Economic week for 2016 sees a few local announcements of note, AUD AiG Performance of Manufacturing Index (DEC) is released at 10:30am followed by CNY Caixin China PMI Mfg (DEC) at 11:45am which will have an immediate impact of the AUD.
Looking forward and if economists are to be proved correct, its looking like a rough year for the AUD with many predicting a trading range of 0.73-0.66c vs the USD so we could well see the best of the AUD in the first few days of the year, keeping an eye on Copper and Iron Ore prices before Monetary Policy comes to the fore in early February which may just set the tone for the rest of 2016.