aus dollar up or down

Will the Australian dollar rise and head yet higher in an extension of the recent recovery? It all depends on the technical outlook says one analyst.

The Australian dollar has had a poor year as the below figures will attest to:

1 GBP = 1.7267 AUD. The pound sterling is 9.6% higher over the course of 2013.
1 EUR = 1.4489 AUD. The euro is a hefty 13% higher since the beginning of January.
1 AUD = 0.9312 USD. The Australian dollar is 10% down over the course of this year.

PS: The above are spot market quotes. Remember your bank will subtract a spread from the figures when passing on a retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.

Despite the poor performance of the Aus dollar in 2013, the situation could be a lot worse as a recent recovery has saved the currency further blushes.

Nevertheless, we ask…

Where is the Australian dollar going from here, up or down?

We put this question to Joshua Mahony, analyst with Alpari UK.

Mahony says he has consulted the Aus vs USD charts and is positive on the Aussie currency:

"It is clear that the pair has broken above a key descending trend-line, which could act as the catalyst for a move higher. The price has since come back to retest the trend-line, which coincides with the 50 hour moving average.

"My outlook is bullish as long as the price remains above this red descending trend-line, with a primary target of 0.946, followed by the high of 0.952."

australian dollar chart

However, when it comes to the pound sterling vs Australian dollar, Sash Nugent at Caxton FX expects the pound to maintain the upper hand:

"Aussie managed to gain after poor UK current account figures yet it is unlikely that this will continue ahead of their rate decision next week.

"We expect the pound to remain in control and levels to fluctuate around the 1.72 level."

Enough selling of the Aus dollar

Meanwhile, a new exchange rate forecast note from Deutsche Bank says the Australian dollar sell off could be at an end:

"The divergence within the dollar-bloc currencies has been striking.

"So far this year, the New Zealand dollar is close-to-unchanged (vs. the US dollar), yet the Australian dollar is down 10%. Consequently, AUD/NZD is at its lowest levels since 2008. We don’t expect that to continue.

"The RBA has likely ended its easing cycle, relative commodity prices should start to move in favour of Australia, not least because of stabilisation in China, and New Zealand’s housing market is softening.

"We like to be long AUD/NZD."