SYDNEY (Reuters) - The Australian and New Zealand dollars are expected to end the year around current levels, a Reuters poll has found, even as the risk of faster U.S. rate hikes and a global trade war sparks wild gyrations in currency markets.
The survey of 41 analysts plotted a uneventful future for the Australian dollar <AUD=D4>, which is seen at $0.7800 in one, three and six months' time.
That would be an unusually flat profile for the typically volatile currency. Over 2017, for example, the Aussie went from as low as $0.7165 to as high as $0.8125 before ending the year just above $0.7800 where it currently sits.
The currency began 2018 on a solid footing, soaring to a 2-1/2 year peak of $0.8136 in late January. But it toppled from the highs as speculation swirled the U.S. Federal Reserve would raise rates four times this year versus earlier expectations of just three hikes.
The sell-off intensified in late February after U.S. President Donald Trump threatened to impose tariffs on imported steel and aluminium, a pledge that met with warnings of retaliation from the rest of the world.
The ongoing uncertainty might explain the wide range in the forecasts from as low as $0.7000 and as high as $0.8600 on a one-year horizon, with the median at $0.8000.
"Were concerns about the health of global trade to become more elevated, this could see speculative support for commodity prices weaken at the same time that risk sentiment deteriorates on a less rosy global growth outlook," said Ray Attrill, head of FX strategy at NAB.
"It's hard to see this being anything other than negative for AUD."
Attrill has pencilled in $0.7500 a year from now.
The Antipodean currencies are often sold during times of stress because both Australia and New Zealand have open economies leveraged to commodity prices and global growth.
The bearish case for the Aussie also rests on its vanishing yield premium because the U.S. Federal Reserve is widely expected to lift U.S. interest rates above Australia's this year, possibly even this month.
That would be a rare event. The last time U.S. rates were higher than Australia's was in January 2001, when the Aussie was around $0.5600.
Just this week, the Reserve Bank of Australia (RBA) left rates at a record low 1.50 percent for a 17th straight meeting, and signalled policy will remain steady for a while yet.
Bond markets have already shifted to reflect that outlook with Australian two-year debt now paying 25 basis points less than U.S. paper. It had offered a premium of as much as 60 basis points as recently as September.
The story was much the same for the New Zealand dollar. The median forecast put the kiwi at $0.7200 for one month, three months, six months and 12 months.
While the median forecasts were narrowly spread, there was far more variety at the extremes, with the highest prediction at $0.7900 and the lowest at $0.6100. <NZD=D4>
The kiwi fell 2 percent in February, but has since stabilised around $0.7300.
Helping the bears, the Reserve Bank of New Zealand left interest rates at record low 1.75 percent last month, while signalling easy monetary policy would last for many months to come.
(Other stories from the global foreign exchange poll:)
