Yahoo Finance AUD/USD and NZD/USD Fundamental Daily Forecast – Mixed as Investors Debate Impact of Rising Treasury Yields, Risk Demand
The Australian and New Zealand Dollars are trading mixed early Thursday after posting solid gains the previous session as buyers shrugged off rising U.S. Treasury yields, choosing instead to respond to stronger-than-expected economic data from Australia.
On Wednesday, the AUD/USD settled at .7666, up 0.0050 or +0.65% and the NZD/USD finished the session at .7033, up 0.0009 or +0.13%.
As reported early Wednesday, Australian Gross Domestic Product rose 1 percent during the first quarter, exceeding the 0.9% estimate. The 2017 fourth quarter figure was revised upward to 0.5%.
The solid GDP number is not expected to sway the Reserve Bank of Australia (RBA) into raising rates earlier than expected, which is November 2019 according to the financial futures markets. However, it was strong enough to scare a few of the weaker shorts out of the market. A similar move took place in the New Zealand Dollar.
The Aussie and Kiwi were also supported by increased appetite for risk and firm commodity prices. It was a risk-on day in the stock market. Additionally, copper prices surged on supply concerns to its highest level since February.
Forecast
Early Thursday, the Australian Dollar is under pressure in a move that suggests profit-taking may be taking place. It’s also straddling a key technical area which could be making buyers a little nervous about chasing the market higher at current price levels. The New Zealand Dollar is up with plenty of room to the upside on the charts before it runs into resistance.
At 0636 GMT, the AUD/USD is trading .7653, down 0.0013 or -0.16% and the NZD/USD is at .7848, up 0.0015 or +0.23%.
Earlier in the session, Australia released reports on construction and trade. The AIG Construction Index came in at 54.0, down from 55.4.
The trade balance was 0.98B, meeting the estimate. The previous report was revised upward to 1.73B. Traders blamed weaker iron ore and coal exports for the narrowing of Australia’s trade surplus in April
The direction of the AUD/USD and the NZD/USD on Thursday will be determined by Treasury yields and stock prices. Aussie and Kiwi investors didn’t seem to be rattled by rising Treasury yields on Wednesday. This is because their focus was on the stock market rally.
Both Forex pairs could surge if yields drop and stocks continue to rise. Weakness in the stock market and a move toward 3 percent by 10-year Treasury yields could weaken the Aussie and Kiwi.
This article was originally posted on FX Empire
