The Australian and New Zealand dollars are expected to lose steam over the next 12 months, reflecting the long-held view that the US dollar will strengthen over time as the Federal Reserve gets nearer to raising interest rates. A poll of 55 analysts forecast the Aussie would edge down to $0.8800 by this time next year, from current levels around $0.9282. Views were wildly divergent as usual, with forecasts as low as $0.7800 and as high as $0.9800.
Analysts' views were nearly a replica of last month's poll, with the currency seen at $0.9200 by the end of June. It is hardly surprising given the currency has been stuck in a $0.9203-$0.9410 band since late March. The majority of analysts have been gloomy about the Aussie for some time, yet the currency has not moved in line with expectations. Instead, the Aussie has gained 4 percent this year, underpinned by solid economic growth and a stable interest rate outlook.
Earlier this week, the central bank kept its main cash rate at a record low of 2.5 percent for a ninth straight policy meeting. A majority of analysts suspect the next move in rates will be upward, but not until early 2015. The New Zealand kiwi was seen at $0.8200 in one year's time, from its current level around $0.8436, a poll of 48 analysts showed. In the near term, analysts were less negative, seeing it at $0.8500 by the end of June and $0.8400 in three months.
The kiwi has lost more than 3 cents in one month, amid a steady decline in prices for dairy, the country's biggest export earner. The currency's decline will be welcomed by the Reserve Bank of New Zealand which has been calling for a lower kiwi for some time. The central bank raised rates in both March and April, taking them to 3 percent, leading most of the developed world in tightening. The debt market has priced in a 91 percent chance that the central bank will raise its official interest rate by 25 basis points to 3.25 percent next week.
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