AUD/USD and NZD/USD Fundamental Daily Forecast – NZ GDP Expected to Show 0.6% Increase

The Australian and New Zealand Dollars are trading higher shortly before Wednesday’s close. The Aussie has been trading steady all session while the Kiwi is recovering from early session weakness.

At 1932 GMT, the AUD/USD is trading .7671, up 0.0010 or 0.13% and the NZD/USD is at .6983, up 0.0011 or +0.16%.

The Australian and New Zealand Dollars are picking up support from a weaker U.S. Dollar on Wednesday amid concerns that the new tax reform deal will have a limited effect on the economy, interest rates and Fed policy.

Some traders are saying that increased fiscal stimulus from the tax bill should support the dollar because it will encourage the Fed to raise rates at a faster pace, however, it could also expand fiscal deficits which would be bearish for the dollar. So the tax reform event may actually have zero effect on the dollar.

Rising U.S. Treasury yields may have capped the gains in the AUD/USD and NZD/USD.

In other news, early Wednesday, the New Zealand Current Account fell to -4.68B, more than the -4.22B estimate. The New Zealand Trade Balance widened to 1193M, more than the -495M forecast. The previous month’s deficit improved to -843M.

Visitor Arrivals rose 2.5%. Last month’s number was revised upward to 2.1%. Credit Card Spending rose 9.1%, up from 3.0%.

In Australia, the MI Leading Index stayed the same at 0.1%.

In the U.S., Existing Home Sales came in at 5.81M versus a 5.53M forecast and 5.50M previous read.

The NZD/USD was under pressure most of the session due to the worse-than-expected Current Account number, however, profit-taking and position-squaring ahead of Thursday’s GDP report helped turn the Forex pair around along with the weaker U.S. Dollar.