Foreign exchange analysts broadly stuck to their predictions for the Australian and New Zealand dollars while expecting a small rebound for the badly battered currencies over a 12-month horizon. A Reuters survey of 42 analysts saw median predictions for the Aussie at $0.7100 on a one-month horizon, from $0.7200 in the previous poll and Monday's close of $0.7210.
Analysts marginally trimmed their projections for 3 and 6 months to $0.7200 and $0.7300 while the outlook for 12 months remained unchanged at $0.7500. Such expectations come amid renewed downward pressure on the Australian currency, which has shed almost 8 percent since the start of the year to hit a 2-1/2 year trough of $0.7021 just last month. The trade-exposed currency has been used by investors to wager on, or hedge against, tensions in emerging markets and the risks to the Chinese economy from US tariffs.
A sudden surge in US bond yields and hawkish commentary from the Federal Reserve has also driven the US dollar higher more broadly. In contrast, the Reserve Bank of Australia (RBA) has repeatedly stated that its rates will remain at historic lows for some time to come. Many analysts had long predicted a steep fall in the Aussie but the currency had found support from a run of strong local data and fund flows from carry trades. That was until the spectre of the Sino-US trade war sent it falling to test 70 US cents in recent weeks.
"The long awaited squeeze in the AUD is materialising," said Daniel Been, head of FX Research at ANZ which has a bearish view on the Aussie. ANZ is among only a handful of analysts in the Reuters poll to forecast a fall under $0.7000. It sees the Aussie at $0.6900 in three months and $0.6800 in six. For the kiwi, analysts staunchly held to their predictions for $0.6600 for one-, three- and six-months out and then a slight uptick to $0.6800 in a year's time. The currency was last trading at $0.6658, above the $0.6481 seen in the previous poll. The downside risk was perceived as greater, though, with forecasts stretching as low at $0.6081 on a six-month view. The kiwi has lost about 6 percent of its value so far this year with a run of weaker-than-expected economic data including sagging business confidence weighing on the currency.