AUD index against major trading partners shows a clear negative trend for currency since its peak in 2012.
Over the past 12 months, AUD has weakened against most major currencies, the largest weakness was noted against the Yen and Swiss Franc.
AUD weakness is also evident over the longer-term period of 3, 5 and 7 years which has benefited investors with unhedged offshore investments – growth and defensive.
The weakness of the AUD has been fundamentally driven – while the commodity prices have been improving, the rate differential between Australian and 2-year is at 20-year lows. This has been underpinned by weaker GDP growth, lower inflation and dovish central bank.
The outlook for AUD is positive against Swiss Franc and Euro but negative against the Pound, USD and Yen.
