Australian dollar in tight range

The Australian dollar is trading in a tight range today after last week’s US Federal Reserve meeting and as traders get ready for the holiday season.

AT 7.10pm (AEDT) the local currency is trading at US81.48 cents up form US81.28 cents on Friday.

The Aussie dollar has now fallen more than 10% in the last 6 months as weak commodity prices and a recovering US economy including the possibility of an Interest rise has put pressure on the currency.

A growing number of Analysts are now jumping on board and predicting the Australian dollar is headed for around US75 cents next year as a slowdown in China and further falls in the Iron ore price, Australia’s biggest export drag down the local economy.

A report from the department of Industry predicted that iron ore prices would fall to around US$63 a tonne and noted,

"The current market oversupply is expected to prevail through the start of 2015 in response to a likely ongoing cyclical downturn in China's housing sector," the report said. "More of China's production is expected to exit the market, particularly over the northern winter, when operating costs typically rise, although a longer period of even lower iron ore prices may be required than previously expected to push supply out of the market."

The sharp decline in the Australian dollar however is a boom for some sectors of Australia’s economy such as tourism, manufacturing and retail sales as the local population snaps up imported goods at cheaper prices in the lead up to Christmas.