AUD/USD and NZD/USD Fundamental Daily Forecast – Lower Treasury Yields Could Spark Upside Breakout

The Australian and New Zealand Dollars are trading higher on Thursday, but remain rangebound for the week, suggesting investor indecision and impending volatility. With the trend shifting to up recently, we feel that it may just be a matter of time before the Aussie and Kiwi attempt a breakout to the upside. Falling U.S. Treasury yields and a weaker U.S. Dollar are likely to be the catalysts that drive the currencies higher.

At 10:01 GMT, the AUD/USD is trading .7629, up 0.0016 or +0.21% and the NZD/USD is at .7026, up 0.0012 or +0.17%.

Aussie, Kiwi Traders Tracking Treasury Yields, US Dollar

The AUD/USD and NZD/USD are trading near their highest levels in nearly two weeks with traders tracking Treasury yields lower, after minutes of the Federal Reserve’s March policy meeting offered no new catalysts to dictate market direction.

Fed officials remained cautious about the risks of the pandemic – even as the U.S. recovery gathered steam amid massive stimulus – and committed to pouring on monetary policy support until a rebound was more secure, the minutes showed Wednesday.

“Participants noted that it would likely be some time until substantial further progress toward the Committee’s maximum-employment and price-stability goals would be realized and that, consistent with the Committee’s outcome-based guidance, asset purchases would continue at least at the current pace until then.”

ANZ April Survey Shows Business Confidence Dip

A preliminary read of the ANZ Bank’s monthly survey for April showed headline confidence becoming more pessimistic, with a net 8 percent believing the broad economic outlook will get worse over the coming year.

The more closely followed “own-activity” measure was steady with 16 percent expecting better times for their own businesses.

ANZ’s chief economist, Sharon Zollner, said the economy was showing stresses and strains.

“Cost pressures are intense, and subdued profitability expectations suggest firms are not optimistic about their ability to recoup all of it,” Zollner said.

Daily Forecast

Later today at 12:30 GMT, investors will get the opportunity to react to the latest report on weekly initial unemployment claims. Economists polled by Dow Jones expect first-time claims to total 694,000 during the week-ended April 3.

Fed Chairman Jerome Powell is due to make a speech at the International Monetary Fund Debate on the Global Economy, at 16:00 GMT on Thursday.

For a look at all of today’s economic events, check out our economic calendar.