The Australian Dollar represents the economy of Australia and is the fifth most commonly traded currency in the world. The Australian Dollar had a fixed exchange rate until 1983 when the Australian Labor government floated the currency. The Australian Dollar was part of the Bretton Woods system from 1946 to 1971 with which the Australian Dollar was pegged to th
6pegged to Gold) until 1967.
As Bretton Woods began to break down, the value of the Australian Dollar was converted to a traditional peg against a floating US Dollar.
In 2021, the trend for the Australian dollar is rising, if you agree with the top 4 banks in Australia. ANZ, CBA, NAB and Westpac are all predicting the Australian dollar to average above 75 cents against the US dollar in 2021, about 5 cents higher than in 2020.
The reasons? A vaccine for the coronavirus is looking more and more likely, which will boost sentiment and growth globally. The Australian government will also extend it’s stimulus spending in 2021, which will help support the economy and the AUD.
NAB and CBA predict the AUD/USD to be around 78 cents by the end of 2021. Westpac has the highest forecast with 80 cents, while ANZ has the lowest at 75 cents.
There are a few reasons that could have an influence on the Aussie:
Coronavirus is controlled successfully with the use of a vaccine and good contact tracing methods to mitigate further outbreaks
The Australian economy bounces back quickly and government has control of coronavirus, supporting domestic travel and the AUD
The US economy falters, US political risks rise, and they continue printing money to stimulate its economy, so the USD falls