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Where is the Australian dollar headed?

Shanghai buildings in China

The S&P/ASX 200 fell on Friday to close down 0.9% at 7063.60. The index was 0.66% lower for the week. US futures are negative and markets across APAC are down.

Bloomberg is reporting that Didi Global has suspended preparations for its planned Hong Kong listing. Chinese stocks have been under intense pressure after months of regulatory crackdowns. Companies listed in Hong Kong including Tencent, Alibaba and Meituan saw share prices fall on Friday after US tech stocks dropped. The Hang Seng Tech Index was down by more than 8%.

Westpac raised its Australian dollar forecasts to US76c by end 2022 and US80c by end 2023. The Australian dollar is currently around US73.35c.

"Risk aversion and relative interest rates are likely to constrain the Australian dollar over the next few months despite significantly higher commodity prices," Westpac’s chief economist Bill Evans said in a note.

He has assumed an oil price of US$100 a barrel through to the end of 2022.

Westpac expects other key commodity prices for Australia including coal and base metals to hold at extremely high levels through to year’s end.

AMP Capital's Head of Investment Strategy & Chief Economist Shane Oliver said that although the $A could fall in response to the uncertain global outlook, a rising trend is likely over the next 12 months helped by strong commodity prices, probably taking it to around US80c.

Learn more: Introduction to fundamentals driving forex pairs

The Dow Jones Industrial Average dipped 112.18 points to 33,174.07, after rallying more than 650 points in the previous session. The S&P 500 shed 0.4% to 4259.52. The technology-focused Nasdaq Composite fell 1% to 13,129.96, dragged down by losses in Apple and Meta Platforms.

In Europe, Germany’s DAX lost 3%, the French CAC was down 2.8% and the FTSE 100 in London closed 1.3% lower.

The Aussie dollar is at US73.35c against the US dollar.

Bitcoin is US$38,462.

Gold is US$1988.03 an ounce.

Brent crude oil is around US$111 a barrel.

WTI crude oil is at US$107 a barrel.

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