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Australian Dollar Exchange Rate Forecast: AUD/GBP, AUD/CAD, AUD/USD, AUD/CNY – Will BOC and BoE Keep Rates on Hold?

Australian Dollar Exchange Rates

The Australian Dollar to British Pound (AUD/GBP), Australian Dollar to Canadian Dollar (AUD/CAD), Australian Dollar to US Dollar (AUD/USD) and Australian Dollar to Chinese Yuan (AUD/CNY) exchange rates were all trending higher in the first half of Wednesday’s European session despite Australian Gross Domestic Product (GDP) falling below forecasts.

The fourth quarter of 2014 recorded 0.5% growth after Q3’s positively revised 0.4%, but remained a shade below the 0.6% prediction. However, the annual figure fell to 2.5% from 2.7% in Q4 in line with forecasts.

Commonwealth Bank chief economist Michael Blythe commented: ‘The good news is we’ve now completed 23 years of continuous growth, the bad news is we’re still running below trend, which will keep upward pressure on the unemployment rate, and keeps the RBA on rate-cut watch.’

RBA Forecast to Cut Rates in the Near Future and Could Cause ‘Aussie’ to Sink

‘These figures are pretty much in line with what the Reserve Bank was expecting to see, so it doesn’t add to the case of a rate cut. But when you have a central bank with a strong easing bias, as they laid out pretty clearly yesterday, then you’ve got to think there’s a good chance in the next couple of months we’ll see another cut.’

Meanwhile, both the British Pound and Canadian Dollar could be under the influence of central bank rate decisions in the next few days. Wednesday’s North American session is expected to see the Bank of Canada (BOC) keep rates stable at 0.75% in March, while the Bank of England (BoE) is forecast to keep the bank rate on hold at 0.50%.

However, the Bank of England has recently been making adjustments to its policies and research which has led some experts to be concerned about the effects of a BoE overhaul in an attempt to modernise could create.

After the central bank recently had to remove a staff member as part of the forex rigging scandal, the BoE’s reputation has been sullied slightly. As central banks are so influential on currencies, investors will watch the BoE reforms closely to monitor any potential impact on the British Pound.

The Canadian Dollar could also be in for fluctuations in coming weeks as oil prices bounce around; Wednesday saw crude values increase, however some economists have forecast further declines.
Meanwhile, the Australian Dollar was offered some support when Chinese figures printed favourably. China’s HSBC Services Purchasing Managers Index hit 52.0 in February from 51.8, while the annual composite ecostat rose from 51.0 to 51.8.

The Yuan has had an interesting week after the People’s Bank of China (PBOC) announced it was cutting interest rates by 25 basis points again in an attempt to stimulate economic growth. March 1st saw the Yuan hit a two year low against the US Dollar (CNY/USD) on the news, despite upbeat manufacturing PMI.

The US Dollar is likely to be a major market mover on Wednesday with the release of US ISM-Non-Manufacturing Composite and the Federal Reserve Beige Book.

However, many investors in the US Dollar are looking toward Friday’s influential US Change in Non-Farm Payrolls and Unemployment Rate stats. If the Unemployment Rate does decline as forecast from 5.7% to 5.6% the US Dollar is likely to rally as investors’ price in Federal Reserve rate hikes in the near future.

Australian Dollar Exchange Rate Forecast: AUD/GBP, AUD/USD, AUD/CNY, AUD/CAD

The Australian Dollar can expect some moderate movement on Thursday when Australian Retail Sales and Trade Balance stats emerge. In addition, Reserve Bank of Australia (RBA) officials are scheduled to speak and could influence ‘Aussie’ trading.

The Australian Dollar to British Pound (AUD/GBP) exchange rate is residing at 0.5106. The Australian Dollar to US Dollar (AUD/USD) exchange rate is hovering at 0.7833. The Australian Dollar to Chinese Yuan (AUD/CNY) exchange rate is trading at 4.9118. The Australian Dollar to Canadian Dollar (AUD/CAD) exchange rate is trending in the region of 0.9802.