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All currencies have dropped against USD which is experiencing the greatest upside momentum in the last 12 months. The Australian dollar finally dipped below the 90-cent the first time since March this year. The big question is ‘will it continue to drop’ and how low can we see’?
I am expecting the current downside momentum to carry it down to 0.87 again before staging a small rebound. We may see ‘double bottom’ around 87 again by the end of 2014.
Weaker commodity growth (due to China’s slowing down), sluggish Aussie’s GDP and expected a U.S. interest hike in the near future has put a downward pressure on the Australian dollar.
Over the last 9 months, Aussie Reserve Bank’s Governor Glenn Stevens repeatedly reiterated his opinion that he would prefer to see the Aussie dropping to 85 cents against the U.S. dollar.
My view (since the last 12 months) remains the same for Aussie dollar ultimately dragged down to around $0.80 or even a tad below by the end of 2015. If the resurgence in USD’ strength continues into late 2015, then we will see Aussie losing ground to 79.56 before its new primary uptrend begins to reasserts its strength.
Look at the charts ( click to see clearly) below