According to the latest data released by the US Commodity Futures Trading Commission, there is an increasing amount of smart money predicting that the Australian dollar will decline against the U.S. dollar.
Which I can't say comes as a surprise given the outlook for rates in both countries. In one corner you have the U.S. looking likely to raise rates at a fast pace over the next 18 months, and in the other corner is the Reserve Bank of Australia which is expected by some to keep rates on hold until 2020.
If all goes to plan with rates, I think the Australian dollar could fall to 70 U.S. cents or below next year.
While this may not be a positive for importers such as Reject Shop Ltd (ASX: TRS), it would be for many ASX shares that generate revenue in North America. This is because they are likely to benefit from favourable currency movements.
Two which I think are likely to benefit more than most are listed below:
Appen Ltd (ASX: APX)
Appen is a machine learning and artificial intelligence dataset provider that I believe could be a great buy and hold investment due to the growing demand for its services from many of the world's biggest tech giants. Management expects another year of stellar growth in FY 2018, but this could be given an additional boost if the Australian dollar tumbles. Which will be a refreshing change as a rebound in the local currency during FY 2017 limited its explosive growth slightly. Appen delivered underlying EBITDA of $28.1 million, up of 62% year-on-year or 73% in constant currency terms.
Integrated Research Limited (ASX: IRI)
I think that Integrated Research is one of the most underappreciated tech stars on the Australian share market. It provides performance monitoring and diagnostics software solutions for business-critical computing environments. It counts some of the biggest companies in the world as customers, including all ten of the largest U.S. banks. This means it generates significant revenues (69% of total revenues in the first-half) in the Americas region and would be given a meaningful boost from a weaker Australian dollar.
