Yahoo Finance AUD/USD and NZD/USD Fundamental Weekly Forecast – Aussie Focus Shifts to RBA Rate Statement, GDP, Trade Balance
Rising U.S. Treasury yields and hawkish testimony by Fed Chair Jerome Powell put pressure on the Australian and New Zealand Dollars most of the week before Trump’s surprise tariff announcement reversed the course of the U.S. Dollar.
The AUD/USD settled the week at .7761, down 0.0075 or -0.96% and the NZD/USD finished at .7238, down 0.0052 or -0.72%.
In other news, ANZ Business Confidence was -19.0, an improvement from the previous -37.8. A report on Australian Private Capital Expenditure showed a 0.2% decline versus a 1.0% forecast. The previous month was revised to 1.9%.
Early in the week, the Aussie and Kiwi trended lower in reaction to a sharp rise in U.S. Treasury yields. Yields were boosted by hawkish comments from Fed Chair Jerome Powell who said the central bank could raise interest rates three or more time during the course of this year to prevent the U.S. economy from overheating.
“We’ve seen some data that in my case will add some confidence to my view that inflation is moving up to target,” Powell told lawmakers on Tuesday. “We’ve also seen continued strength around the globe. And we’ve seen fiscal policy become more stimulative. So I think each of us is going to be taking the developments since the December meeting.”
The selling pressure reversed late in the week after President Trump announced tariffs on steel and aluminum. Trump said the U.S. will implement a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports this week. The surprise announcement sent stocks reeling, with the Dow losing about 500 points over two session. It also raised concern that Canada, Asia and Europe may implement retaliatory tariffs on U.S. exports.
Forecast
Early in the week, the focus for Forex traders will be on the Italian elections and further fallout from Trump’s tariff announcements. A stronger-than-expected showing for the anti-establishment 5-Star Movement will be bad for the Euro and the implementation of retaliatory tariffs should have a negative influence on the U.S. Dollar. The Australian and New Zealand Dollar could attract buyers if those two benchmark currencies weaken substantially.
Besides the uncertainty surrounding the tariff news, there is a slew of major economic data this week from Australia and the United States.
The week starts with the U.S. releasing its latest data on ISM Non-Manufacturing PMI. It is expected to come in slightly lower than the previous month at 58.9.
Early Tuesday, Australia’s Current Account is expected to come in at -12.3 Billion, lower than the previous -9.1 Billion. However, Retail Sales are expected to rise 0.4%, a marked improvement from the previously reported -0.5%.
Later on Tuesday, the Reserve Bank of Australia will announce its interest rate decision. It is widely expected to leave its benchmark rate unchanged at 1.50%. This will be followed closely by its Rate Statement.
Wednesday will feature a speech by RBA Governor Lowe and the release of the latest quarterly GDP. It is expected to come in at 0.5%, slightly below the previously reported 0.6%.
Finally, early Thursday, Australia’s Trade Balance is expected to improve to 0.22 Billion from -1.36 Billion.
The highlight for the week will be the U.S. Non-Farm Payrolls report, due to be released on Friday. The headline number is expected to show the economy added 204K jobs in February. The Unemployment Rate is forecast to have dropped to 4.0% from 4.1%. The most watched part of the report will be Average Hourly Earnings since it is a measure of inflation. It is expected to show an increase of 0.3%.
Looking at the weekly chart, the direction of the AUD/USD is likely to be determined by trader reaction to the long-term Fibonacci level at .7743.
The NZD/USD has near-term resistance at .7275 to .7306. Overcoming this area will shift momentum back to the upside. The next downside target is .7175. If this level fails then watch for a possible acceleration into .7108.
This article was originally posted on FX Empire
