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AUD/USD and NZD/USD Fundamental Daily Forecast – China Concerns, Strong U.S. GDP Sink Aussie, Kiwi

By:
James Hyerczyk
Published: Feb 28, 2019, 21:44 UTC

The Aussie and Kiwi were under pressure all session on Thursday. Both currencies were pressured early by renewed tensions over U.S.-China trade negotiations and weaker-than-expected Chinese manufacturing data. Later in the session, the selling pressure increased after U.S. GDP beat expectations. This drove up U.S. Treasury yields, making the U.S. Dollar a more attractive investment.

AUD/USD and NZD/USD

The Australian and New Zealand Dollars are trading lower shortly before the release of a few key economic reports. At 21:30 GMT, Australian Dollar traders will get the opportunity to react to the AIG Manufacturing Index. At 21:45 GMT, New Zealand will release is latest data on Building Consents and Overseas Trade Index.

At 21:23 GMT, the AUD/USD is trading .7095, down 0.0047 or -0.66% and the NZD/USD is at .6810, down 0.0037 or -0.55%.

The Aussie and Kiwi were under pressure all session on Thursday. Both currencies were pressured early by renewed tensions over U.S.-China trade negotiations and weaker-than-expected Chinese manufacturing data.

The Kiwi felt additional pressure from follow-through selling related to a weaker-than-expected Trade Balance report released during the previous session.

Later in the session, the selling pressure increased after U.S. GDP beat expectations. This drove up U.S. Treasury yields, making the U.S. Dollar a more attractive investment.

U.S. China Trade Negotiations

Investor confidence took a hit after U.S. Trade Representative Robert Lighthizer told members of the U.S. House Ways and Means Committee that much remains to be done in order to get a trade deal, but also said real progress is being made towards getting a deal. He also said the issues between the two countries are too serious to be resolved with promises of additional purchases.

“If we can complete this effort, and again I say if, and can reach a satisfactory solution to the all-important outstanding issue of enforceability, as well as some other concerns, we might be able to have an agreement that helps us turn the corner in our economic relationship with China,” Lighthizer told lawmakers.

Chinese Manufacturing Miss

Factory activity in China contracted to a three-year low in February as export orders fell at the fastest pace since the global financial crisis, highlighting deepening cracks in an economy facing weak demand at home and abroad.

The official Purchasing Managers’ Index (PMI) fell for the third straight month, dropping to 49.2 in February from 49.5 in January, according to data released by the National Bureau of Statistics (NBS) on Thursday.

Treasurys Jump as GDP Beats Forecasts

U.S. Treasury yields rose sharply after the first report on fourth-quarter gross domestic product growth topped economists’ expectations. U.S. economic growth rose 2.6 percent versus an expected gain of 2.2 percent after a 3.4 percent rise in the third quarter.

The sharp rise in Treasury yields widened the spread between U.S. Government bonds and Australian Government bonds, making the U.S. Dollar a more attractive investment.

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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