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AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Spikes Higher on Unemployment Rate Dip

By:
James Hyerczyk
Published: Oct 17, 2019, 00:39 UTC

Keep an eye on the Unemployment Rate. This is what the Reserve Bank of Australia is watching. Another increase will cause a surge in the chances of a rate cut by the RBA next month.

AUD/USD and NZD/USD

The Australian and New Zealand Dollars are trading lower early Thursday after posting a mixed performance the previous session. The currencies were whip-sawed on Wednesday with the downside price action fueled by renewed concerns over U.S.-China trade relations, and central bank comments that suggest another rate cut in the future. The upside move triggered by weaker-than-expected U.S. economic data, which increased the chances of a Fed rate cut at the end of the month, weakening the U.S. Dollar.

On Wednesday, the AUD/USD settled at .6760, down 0.0034 or -0.50% and the NZD/USD closed at .6291, down 0.0048 or -0.75%.

Early Thursday, the Aussie is trading .6755, down 0.0005 or -0.07% and the Kiwi is at .6285, down 0.0006 or -0.09%.

The U.S. Dollar was the primary focus for traders on Wednesday. The greenback fell after dismal U.S. retail sales data painted a gloomy picture of the economy and supported the case for further interest rate cuts by the Federal Reserve.

According to a government report, U.S. retail sales fell for the first time in seven months in September, suggesting that manufacturing-led weakness could be spreading to the broader economy.

In other news, a lack of details on the partial trade deal between the U.S. and China announced on Friday continued to weigh on the Australian and New Zealand Dollars. Lingering worries about trade tensions between the two economic powerhouses kept investor demand for the commodity-linked Aussie and Kiwi in check.

The Australian and New Zealand Dollars were also pressured after Beijing criticized new U.S. legislation backing pro-democracy protests in Hong Kong.

Earlier in the session, Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle said in a speech that Australia’s property downturn is hitting household consumption and is a big drag on economic growth and inflation that will likely last at least another year, despite three interest rate cuts.

Daily Forecast

At 00:30 GMT, traders will have the opportunity to react to the latest data on Australian Employment Change and Unemployment Rate. The NAB will also release its Quarterly Business Confidence report.

The Employment Change report is expected to show the economy added 15.3K jobs in September. The Unemployment Rate is expected to have remained unchanged at 5.3%.

Keep an eye on the Unemployment Rate. This is what the Reserve Bank of Australia is watching. Another increase will cause a surge in the chances of a rate cut by the RBA next month.

The AUD/USD will weaken if the data comes in on the weak side, however, losses will be limited because of the weakening U.S. Dollar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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