AUD/USD and NZD/USD Fundamental Daily Forecast – Facing Renewed Pressure from Weaker Crude Oil Prices

The commodity-linked Australian and New Zealand Dollars were pressured on Friday as oil prices fell after Russia and Saudi Arabia said they were ready to ease production curbs that have supported crude prices.

On Friday, the AUD/USD settled at .7547, down 0.0030 or -0.40% and the NZD/USD finished the session at .6916, down 0.0013 or -0.20%.

Russian Energy Minister Alexander Novak said a group of producer nations could soon begin easing production limits aimed at balancing the market.

“The moment is coming when we should consider assessing ways to exit the deal very seriously and gradually ease quotas on output cuts,” Novak said in televised comments, according to Reuters.

In other news, the U.S. Dollar was supported by data showing new orders for key U.S.-made capital goods increased more than expected in April and Shipments rebounded, suggesting that business spending on equipment was picking up after slowing down at the end of the first quarter.

According to the Commerce Department, Core Durable Goods Orders rose 0.9% versus an estimate of 0.5%. The previous report showed a rise of 0.1%.

Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, dropped 1.7 percent in April as demand for transportation equipment tumbled 6.1 percent. That followed a 2.7 percent increase in durable goods orders in March.

U.S. consumer sentiment came in weaker than expected on Friday in the final reading of May. The University of Michigan’s survey of consumer attitudes reached 98 in the latest reading. Economists surveyed by Reuters expected it to hit 98.8, the same from a month earlier.

Forecast

Geopolitical issues became a concern for Aussie and Kiwi investors once again last week. President Trump’s disappointment with the U.S.-China trade negotiations and his surprise cancellation of his meeting with North Korean President Kim Jong Un helped create some volatility.

Underpinning the currencies against the U.S. Dollar was a drop in U.S. Treasury yields that was fueled by the release of dovish minutes from the Fed’s May Monetary Policy meeting.

The longer-term trend remains down because of the contrast between the monetary policies of the hawkish U.S. Federal Reserve and the dovish Reserve Banks of Australia and New Zealand.

Short-term, the AUD/USD and NZD/USD could get a boost if Treasury yields continue to drop and the U.S. reinstates the meeting with North Korea, originally scheduled for June 12. However, gains could be limited by another steep sell-off in crude oil.