Currency Analyst since 2010

HSBC: long-term bearish AUD/USD

HSBC expects AUD/USD to drop to $0.9000 by the end of this year and to $0.8600 by the end of 2014 as the Fed’s tapering of monetary stimulus will revive US dollar. Note that according to Bloomberg, HSBC was the most accurate at predicting AUD over the past year. Emirates NBD and CIBC, the second and third-best forecasters, see a deeper decline to $0.8500 during 2014.

The Fed’s now expected to start slowing its bond-buying in December, while the RBA rate is projected to rate cut in the first half of next year.

The impact of a boom in Australia’s resources sector is now fading. The RBA expects the weakest growth since 2009 this year. Australian trade deficit in August was almost in 2 times bigger than expected. Data release last month showed that payrolls unexpectedly dropped and the unemployment rate climbed to a 8-year high. The OECD says that even after this year’s decline, AUD is still 27% overvalued versus USD.

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