Yahoo Finance AUD/USD and NZD/USD Fundamental Weekly Forecast – Focus on U.S. Reports, Fed Chair This Week
The Australian and New Zealand Dollar finished mixed against the U.S. Dollar last week. Both were subject to the influence of their respective central banks with the Reserve Bank of Australia releasing its monetary policy minutes and the Reserve Bank of New Zealand issuing its latest monetary policy decision.
The AUD/USD settled the week at .7568, down 0.0047 or -0.62% and the NZD/USD closed the week at .7280, up 0.0032 or +0.45%.
The Reserve Bank of Australia minutes covered the same topics previously highlighted. The RBA said that housing and employment merit watching, as does the Australian Dollar strength. The central bank’s attempt to talk down its currency worked as investors reacted negatively to the minutes.
The steep drop in crude oil also weighed on the commodity-linked Aussie Dollar.
The New Zealand Dollar rose last week after the central bank held official cash rates at record lows but sounded less dovish than bearish investors had expected.
Some investors were looking for the Reserve Bank of New Zealand to do more to talk down the currency which had gained 3 percent since May. However, the RBNZ only said a lower exchange rate “would help rebalance the growth outlook.” Investors were surprised the RBNZ Governor did not say that a lower currency was “needed” for rebalancing to occur.
The RBNZ also reiterated its policy would be accommodative for a “considerable period,” after the economy grew a disappointing 0.5 percent in the first quarter.
Forecast
The major reports this week are all in the United States. They include Core Durable Goods Orders, Conference Board Consumer Confidence, Final GDP and Weekly Unemployment Claims.
In addition to the reports, investors will listening intently to a speech by Fed Chair Janet Yellen and monitoring the price action in crude oil since it tends to influence these commodity-based currencies.
Core Durable Goods Orders are expected to come in at 0.4%, better than the previous month. Consumer Confidence is expected to come in lower than the previous read to 116.2. Final GDP is forecast at 1.2%, unchanged from the last report and weekly unemployment claims are expected to also come in unchanged at 240K.
Aussie and Kiwi investors will be watching the interest rate differential between Australian and New Zealand Bonds and U.S. Treasury Bonds. This should have an influence on the direction of the AUD/USD and NZD/USD.
U.S. Treasury yields have been falling lately because of weakening U.S. inflation and growth. Investors believe the economy is too weak to handle another Fed interest rate hike later in the year. Fed Chair Yellen may shed a little more light on this issue. Just two weeks ago, she was hawkish about Fed policy, but also expressed caution about inflation. She felt it would pick up by the end of the year, but in the wake of last week’s sell-off in crude oil, she may have changed her mind.
This article was originally posted on FX Empire
