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AUD/USD and NZD/USD Fundamental Daily Forecast – Supported by Easing Risk Aversion, Aussie Employment Data Mixed

The main driving force today in the market will be investor aversion to risk. Risk-on, and the Aussie and Kiwi benefit. Risk-off, and they both resume this week’s downtrend.

The Australian and New Zealand Dollars are moving higher early Thursday as risk aversion eased and emerging market currencies rebounded on news that a Chinese delegation will travel to the United States late in August to hold trade talks.

At 0613 GMT, the AUD/USD is trading .7270, up 0.0031 or +0.43% and the NZD/USD is at .6586, up 0.0021 or +0.32%.

According to reports, China’s Ministry of Commerce said on Thursday that it had received an invitation from the United States for talks to be held with U.S. Under Secretary of Treasury for International Affairs David Malpass.

The Aussie and Kiwi were boosted by a shift in investor sentiment after a trying week that saw both currencies driven lower by dovish central bank comments and a huge rise in demand for the U.S. Dollar due to a financial crisis in Turkey.

Forecast

The news about renewed talks between the U.S. and China is currently underpinning the AUD/USD and NZD/USD. An easing of tensions in Turkey is also providing some support, but this situation is still too unstable to eliminate it as a concern. Gains could be limited today if problems in Turkey resurface. On the other hand, increased demand for risky assets like stocks could provide an additional boost for the Aussie and the Kiwi.

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A weaker U.S. Dollar could also help boost commodities especially gold. This could also trigger further short-covering in the Australian and New Zealand Dollars.

Australian Employment Data

In other news, Australia’s jobs report missed expectations in July. Total employment in Australia fell by around 3,900 in July in seasonally adjusted data, missing forecasts for a gain of 15,000.

Despite the drop in the headline number, the unemployment rate edged to the lowest level since 2012, due to a decline in the labor force participation rate.

The mixed report should not encourage the Reserve Bank of Australia to change policy. It’s still not likely to make a move until late 2019 or 2020. While the report shows that the underlying health of Australia’s labor market is still strong, a return to higher wage growth still looks a long way off.

The main driving force today in the market will be investor aversion to risk. Risk-on, and the Aussie and Kiwi benefit. Risk-off, and they both resume this week’s downtrend.

This article was originally posted on FX Empire

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