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AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Drifts Lower after Employment Data Fails to Impress

The Australian and New Zealand Dollars finished mixed on Wednesday as investors prepared for a key employment report from Australia. Both currencies remained inside major technical retracement zones which are controlling the longer-term direction.

The AUD/USD settled at .7846, up 0.0001 or +0.02% and the NZD/USD finished the session at .7151, down 0.0018 or -0.26%.

AUDUSD
Daily AUDUSD

A firm U.S. Dollar kept a lid on the Aussie and Kiwi. The Greenback was supported by speculation that President Trump would appoint a hawk as Fed chair and progress on U.S. tax reform. Earlier in the week, Senate Republicans gained crucial support for a vote on a budget resolution that is vital to President Trumps Trump’s hopes of signing tax reform legislation into law before January.

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In other news, U.S. housing data came in weaker-than-expected. Building Permits were 1.22 million units versus an estimate of 1.25 million units. The previous month was also revised lower. Housing Starts came in at 1.13 million units, below the 1.18 million unit estimate.

The U.S. Beige Book showed increased economic activity in all 12 Federal Reserve districts.

NZDUSD
Daily NZDUSD

Forecast

The AUD/USD is trading slightly better following the release of key Australian employment data. The Employment Change showed the economy added 19.8K jobs in September. This beat the estimate but came in well below the previous month’s performance. The Unemployment Rate was 5.5%, lower than the 5.6% estimate and previous read.

The NAB Quarterly Business Confidence came in at 7. The previous read was revised up to 8. Reserve Bank of Australia Assistant Governor Michele Bullock is scheduled to speak at the Australian Shareholders Association.

China also released several key reports which for the most part came in as expected. Quarterly GDP was 6.8% as expected, lower than the previous 6.9% read.

Industrial production rose 6.6%, slightly better than the 6.4% forecast. Fixed Asset Investment was 7.5%, slightly below expectations. Retail Sales came in at 10.3%, slightly better than the 10.2% estimate.

In the U.S. on Thursday, investors will continue to respond to any news on Trump’s Fed Chair appointment and U.S. tax reform.

Economic data includes weekly Unemployment Claims, the Philadelphia Fed Manufacturing Index, the Conference Board’s Leading Index and Federal Budget Balance.

The direction of the AUD/USD is likely to be determined by trader reaction to a key technical level at .78475. Conditions could turn bullish on a sustained move over .7848 and remain sideways to lower on a sustained move under .7847.

The key area to watch for the NZD/USD is a retracement zone bounded by .7188 and .7100. We could develop an upside bias on a sustained move over .7188. The downtrend will continue on a sustained move under .7100.

This article was originally posted on FX Empire

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