New Zealand




Currencies Close Monthly Quarter 1 Year 3 Year 5 Year 10 Year
$A vs $US  0.7762 -3.6% 2.6% 1.4% -0.2% -5.3% -1.8%
$A vs GBP  0.5641 -0.6% 0.8% -8.8% 3.7% -3.5% 1.9%
$A vs EUR   82.81% -5.9% -2.8% -4.1% -3.9% -2.6% -1.5%


The AUD was flat in trade-weighted terms over the three months to the end of February, with cooling commodity prices and reduced export volumes offsetting rises in the start of the year. The AUD rose 2.6% against the USD, hitting high of 0.8110 in late January to end February at 0.7792. The AUD was down against the JPY (-2.8%) and the NZD (-2.3%) and up against the EUR (+0.1%) and GBP (+0.8%).

AUD weakness in February in part reflected a vanishing yield premium, with the US Fed expected to hike rates, in March. The US Dollar Index rose 1.7% in February but still appears to be in a downward trend. Concerns over the rising US budget and current account deficits may have contributed to US dollar falls over recent months.

The Outlook

The outlook for the Australian dollar remains hard to call, partly because there continues to be a high degree of uncertainty around U.S. economic policy, not helped by the latest change in key personnel, with a new director of the White House National Economic Council. While there are potential upside factors – a “commodity-backed” currency, as the Australian dollar is sometimes classified, would be expected to do well in the current conditions of strong global trade growth – the downside pull of relative interest rate differentials may be more decisive, with U.S. short-term rates likely to rise in coming months but local ones likely to remain unchanged. NAB, for example, with its new forecasts of little change in local monetary policy, has the Australian dollar dropping from its current USD 78.7 cents to USD 75 cents by the end of this year.


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