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Australian dollar falls in 2016 financial year

Australian dollar falls in 2016 financial year

The Australian dollar fell by 3.5% against the US currency in the 2016 financial year.

While AUD depreciated by 3.5% against USD, it traded in a US10 cent range throughout the 12-month period.

The move lower continues a trend since 2013, when the Aussie started to drop from parity, and compares with a decline of almost 18% in the previous financial year.

Market volatility was greatest in the second half of FY16, with AUD dropping to its 12-month low of US68.64 cents in January, according to Bloomberg data. It hit the year’s high of US78.13 cents in April.

The Aussie is currently trading at US74.33 cents, having seemingly weathered the most recent global economic and market shock when the United Kingdom Leave vote on June 23 set the UK on a path to negotiate an exit from the European Union over the next few years.

Forecasts revised

As a result of the unexpected referendum vote result, Commbank currency strategists lowered their British pound (GBP) forecasts, predicting now that GBP/USD will reach US$1.2000 by June 2017, compared with US$1.5400 previously. It’s currently around US$1.33.

For now, AUD/GBP is holding above 55 pence, the highest since November 2014.

CommBank trimmed its euro (EUR) forecasts, predicting that through 2017, the EUR will track sideways, hovering around 1.100 where it has been since early 2015. AUD/EUR is currently trading around 67 euro cents.

CommBank forecasts

by December 2016

  • AUD/USD 0.7300
  • AUD/EUR 0.6636
  • AUD/GBP 0.5794
  • AUD/NZD 1.0735
  • AUD/JPY 77.38

by June 2017

  • AUD/USD 0.7500
  • AUD/EUR 0.6522
  • AUD/GBP 0.6250
  • AUD/NZD 1.0714
  • AUD/JPY 82.50

Country rankings

Bloomberg data shows the Aussie sitting in the middle of currency world rankings with the South African rand at the bottom of 16 countries listed, depreciating by 17.61% over the 12-month period, and the British pound down more than 14%.

At the top of the list, only three of the basket of 16 countries appreciated in value with the Japanese yen at the top, up by 19.15%, and the New Zealand dollar strengthening by 5.01%. The Danish krone was up 0.09%.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Past performance is not an indication of future performance.