Analysts Forecast that AUD/USD Gains are Unsustainable in the Long-Term
The Australian Dollar US Dollar (AUD/USD) exchange rate was forced to cede ground again on Friday as markets become increasingly wary of the pairing’s recent surge.
At the time of writing AUD/USD has is down by around 0.50% from its opening levels on Friday, extending the week’s losses to around a cent.
Australian Dollar (AUD) Slides as Markets Brace for Possible Correction
The Australian Dollar is looking a little shaky against the US Dollar at the end of this week’s session as analysts forecast that a correction in the pairing is long overdue.
AUD/USD has rocketed higher in recent months, breaking through the $0.80 barrier as the ‘Aussie’ was able to ride the wave of US Dollar weakness that has been sweeping through currency markets.
However economists are becoming increasingly sceptical that the Australian Dollar will be able to hold on to these gains.
Daniel Been, head of ANZ Bank’s FX Strategy Team said;
‘The risk of a reversal is rising. As was the case late last year when the AUD looked excessively weak, we do not think that the current state of affairs is sustainable.’
Been suggests that with the ‘Aussie’s recent gains being largely driven by commodity prices and risk appetite, both of which are notoriously volatile any, leaving the currency will little support when the inevitable reversal comes.
Meanwhile Been perceives the recent weakness in the US Dollar as a bit of statistical anomaly, with the current weakness in USD at a ‘historical extreme’, suggesting that the US currency has a lot of headroom to move once it begins to rally again.
AUD/USD Forecast: US Non-Farm Payrolls to Rise?
Looking ahead the AUD/USD exchange rate may tumble at the end of this week’s session at the US publishes its latest employment figures.
Economists forecast that the latest US Non-Farm payroll figures will show that 180,000 people will have joined the US workforce last month, up from 148,000 in December.
While this is not expected to impact the unemployment rate, which is forecast to hold at a 17-year low of 4.1%, the risen will boost confidence that the US economy may continue to expand at a healthy clip in 2018.
Meanwhile AUD investors are likely to turn their focus towards next week and the release of Australia’s latest Services PMI, with a predicted uptick in services activity likely to strengthen AUD.