AUD likely to depreciate almost 4% against USD in 2016

Since the AUD bottomed out against the USD in mid-January, it has strengthened by more than 10%, reversing some of its losses. However, a prolonged decline in Australia’s main export commodity prices and investor worries about Chinese economy slowing is expected to keep AUD on the defensive against the USD, according to Scotiabank. Furthermore, the Australian dollar is expected to be impacted by Australia’s accommodative monetary policy stance amidst the slow monetary policy tightening bias in the US, noted Scotiabank.

“We expect the AUD/USD rate to close 2016 at 0.70, implying a near-4% depreciation over the course of the year”, added Scotiabank.

Meanwhile, major credit rating agencies have given high sovereign credit rating for Australia. This shows the monetary and fiscal flexibility, economic resilience and firm macroeconomic management of the nation.