Advertisement
New Zealand markets closed

  • NZX 50

    11,805.09
    -141.34 (-1.18%)
     

  • NZD/USD

    0.5941
    -0.0008 (-0.14%)
     

  • NZD/EUR

    0.5549
    +0.0009 (+0.16%)
     

  • ALL ORDS

    7,837.40
    -100.10 (-1.26%)
     

  • ASX 200

    7,575.90
    -107.10 (-1.39%)
     

  • OIL

    83.66
    +0.09 (+0.11%)
     

  • GOLD

    2,349.60
    +7.10 (+0.30%)
     

  • NASDAQ

    17,718.30
    +287.79 (+1.65%)
     

  • FTSE

    8,139.83
    +60.97 (+0.75%)
     

  • Dow Jones

    38,239.66
    +153.86 (+0.40%)
     

  • DAX

    18,161.01
    +243.73 (+1.36%)
     

  • Hang Seng

    17,651.15
    +366.61 (+2.12%)
     

  • NIKKEI 225

    37,934.76
    +306.28 (+0.81%)
     

  • NZD/JPY

    94.0360
    +1.5400 (+1.66%)
     

AUD/USD and NZD/USD Fundamental Weekly Forecast – Light Trade, Low Volume Expected This Week Ahead of U.S. Holiday Week-End

James Hyerczyk
Updated

The Australian Dollar finished higher last week despite an extremely volatile trade. The currency traded better early in the week in reaction to a weaker U.S. Dollar, but was crushed mid-week with the release of hawkish U.S. Federal Reserve meeting minutes and political turmoil in Australia.

The Aussie firmed enough on Friday to recapture its earlier loss, led by the lifting of political uncertainty following the ousting of Prime Minister Malcolm Turner and the appointment of Scott Morrison as the new leader. The Aussie also received a boost after the greenback weakened in response to dovish comments from Fed Chair Jerome Powell, who hinted that the central bank was getting close to normalization.

For the week, the AUD/USD settled at .7327, up 0.0010 or +0.13%.

Early in the week, Reserve Bank of Australia governor Philip Lowe said that interest rates in Australia will rise, “at some point”, and urged borrowers to get their house in order to prepare for higher interest expenses. Lowe also lashed out at Australia’s banking system, told Australians to keep the recent housing price slump in perspective, and slammed the economic policies of U.S. President Donald Trump.

ADVERTISEMENT

Additionally, the RBA reiterated that it had no plans to adjust monetary policy in the near term in its August monetary policy meeting minutes released on Tuesday and pointed to potential risks from global trade tensions and the impact of a drought that has hit rural Australia.

New Zealand Dollar

The New Zealand Dollar was driven higher last week by strong domestic data and a weaker U.S. Dollar. Domestically, quarterly Retail Sales rose 1.1%, up from 0.3%. The forecast called for a 0.4% gain. Quarterly Core Retail Sales were up 1.4% versus an estimate of 0.8%. The previous quarter was 0.6% higher. The GDT Price Index came in down 3.6%.

The NZD/USD settled at .6690, up 0.0055 or +0.83%.

Forecast

Low volume could be the highlight this week as investors prepare for next Monday’s U.S. Labor Day bank holiday. I expect to see limited activity by the major banks and institutions.

The major reports are limited this week so any activity is likely to be new driven. On Thursday, New Zealand will release a report on ANZ Business Confidence. The major report in Australia is Private Capital Expenditures.

The major U.S. report is Wednesday’s Third Quarter Preliminary GDP. It is expected to come in at 4.0%, slightly below the previously reported 4.1%.

Minor U.S. reports include Conference Board Consumer Confidence, Core PCE Price Index, Personal Spending and Chicago PMI.

Although U.S. GDP is called a major report, I tend to differ. In my opinion, the data is stale so I don’t expect to see much of a reaction to this number this week.

I think investors should pay more attention to the U.S. Core PCE Price Index on Thursday at 1230 GMT. This report is the Fed’s preferred inflation indicator. It is expected to come in at 0.2%, up from 0.1%. This will indicate another gradual rise in inflation.

This article was originally posted on FX Empire

More From FXEMPIRE: