AUD/USD and NZD/USD Fundamental Daily Forecast – Firm Crude Oil Prices Boost Commodity-Linked Currencies

The Australian and New Zealand Dollars are edging higher on Thursday after reversing earlier losses as the U.S. Dollar fell against the currencies of oil-producing states and other commodity-linked currencies.  A recovery in crude oil prices is bringing some relief to the markets shaken by the massive coronavirus-induced drop in demand.

At 10:57 GMT, the AUD/USD is trading .6344, up 0.0022 or +0.35% and the NZD/USD is at .5980, up 0.0028 or +0.47%.

Crude Oil Bounce Providing Support

Crude oil rose on Thursday, spurred by rising tensions in the Middle East, output cuts by producing nations to tackle oversupply and the promise of more government stimulus to ease the economic pain of the new coronavirus pandemic.

The rally on Thursday followed an announcement from President Donald Trump he had instructed the U.S. Navy to fire on any Iranian ships that harass it in the Gulf, although he added later he was not changing the military’s rules of engagement.

Signs of output cuts by producers also supported prices as well as the promise of more government stimulus to help affected businesses improved market sentiment across global markets.

Grim Business Activity News

The Australian Dollar is showing little reaction on Thursday to a survey showing grim business activity data, which overshadowed a surge in exports.

The country’s overall activity index plunged to a record low of 22.4 in April, compared with 40.7 in March, implying a contraction. Virus-driven lockdowns and social distancing hit the services sector hardest.

“The services PMI was significantly woeful – reality bites – 19.6 and will get worse,” said Henry Jennings, senior analyst at Marcustoday.

The dire manufacturing and services survey data took the shine off a 29% spike in goods exports last month as the resource-rich country shipped more iron ore to China and more gold to Hong Kong and the UK.

Australian Flash Manufacturing PMI came in at 45.6, while the previous month was revised lower to 49.7. Australian Services PMI came in at 19.6. The previous month was revised lower to 38.5%.

Record Jump in Australian Retail Sales

On Wednesday, the Australian Bureau of Statistics said a preliminary estimate of Australian retail sales showed an 8.2% rise in March from February.

The increase would be the strongest seasonally adjusted rise ever published, coming as Australians prepared for restrictions on their movements amid the Covid-19 pandemic. The result was supported by strong sales across supermarkets, liquor retailing and other specialized food. Monthly turnover doubled for products such as toilet and tissue paper, and rice and pasta, according to ABS.

Daily Forecast

Later today, investors will get the opportunity to react to the Weekly U.S. Unemployment Claims report at 12:30 GMT and the Flash Manufacturing PMI data at 13:45 GMT.

The jobless claims report is expected to show 4.35 million Americans filed unemployment claims last week, bringing the total filings since late March to more than 26.3 million, according to Dow Jones data.

Today’s Flash Manufacturing PMI report is expected to come in at 35.1, down from 48.5. Flash Services PMI is expected to come in at 30.5, down from 39.8.