The Australian dollar is expected to fall by 7% in 2022, which would be the biggest drop since 2018 and the result of aggressive interest rate hikes around the world, pandemic restrictions in China, and worries about global growth.
Another risk-sensitive currency is the New Zealand dollar, which is on track to end the year 7.5% lower than it did a year ago. This would be its biggest drop since 2015.
The Aussie fell 0.2% to $0.6764 on Friday after rising 0.5% overnight to $0.6787, which was its second-highest level in the last two weeks. The 10-day moving average of $0.6722 gives it support, and 68 cents is where it meets resistance.
Related: Stocks rise as China lifts its quarantine restriction, while the US dollar declines.
The New Zealand dollar fell 0.3% to $0.6332.Overnight, it went up by 0.6% to a 7-day high of $0.6357. It’s now getting help for $0.6230.
Both the Australian dollar and the New Zealand dollar ended 2021 at $0.7269 and $0.6844.
Overnight, a rise in U.S. jobless claims and a sharp drop in business lending in the euro zone showed that hawkish monetary policies were cutting demand to slow inflation, which was good news for risky assets.
Wall Street also went up, thanks to a comeback in mega-cap growth stocks that had been hit hard recently.
“Looking back as we get closer to the end of the year, 2022 was a wild ride for currency markets. Analysts at Capital Economics said, “We thought the dollar would have a good year, but the size of its rise surprised us.”
“All things considered, we think the dollar will go up again in the first half of 2023.”
Related: Following the BOJ change, the dollar declines while the yen climbs. Is a dovish posture the best course of action?
The Reserve Bank of Australia may raise interest rates to 4% by September of next year, up from 3.6% a week ago, according to the futures market. This would make it the first major central bank to slow the rate of interest rate hikes.
