AUD/USD and NZD/USD Fundamental Daily Forecast – NZ GDP Jump Indicates Nearly True V-Shaped Recovery

The Australian and New Zealand Dollars are trading higher early Thursday following the release of stronger-than-expected domestic economic reports. The currencies are also being supported by the U.S. Federal Reserve’s latest pledge to support the economy and the apparent progress in U.S. fiscal stimulus negotiations.

At 03:23 GMT, the AUD/USD is trading .7590, up 0.0012 or +0.15% and the NZD/USD is at .7132, up 0.0017 or +0.24%.

Fed Makes Promises

The Fed said it will buy at least $120 billion of bonds each month “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.”  The Fed declined to make any changes to the duration of its bond-buying program, but Chairman Jerome Powell said the central bank would increase its asset purchases if the economic recovery slows.

 Fiscal Stimulus Deal Close

Congressional leaders closed in on a $900 billion rescue deal that would include a new round of direct payments to consumers. However, that package excludes a liability shield for businesses and state and local aid, CNBC has confirmed. Politico first reported the news.

New Zealand GDP Grows Record 14% in 3Q after COVID Lockdown

New Zealand’s economy grew a record 14% in the third quarter, bouncing back from a COVID-19 lockdown earlier in the year that shut businesses and brought activity to a standstill, official data showed on Thursday.

Annual gross domestic product (GDP) rose 0.4%, Statistics New Zealand said, with both figures beating expectations in a Reuters poll for quarterly growth of 13.5% and an annual contraction of 1.3%.

The GDP numbers also topped the Reserve Bank of New Zealand’s November forecast of quarterly and annual growth of 13.4% and minus 1.3% respectively.

Second quarter GDP was revised to a drop of 11.0% from an initial estimation of minus 12.2%. On an annual average basis GDP fell 2.2 percent in the year ended September 2020.

Australia November Jobs Soar Again in Boost to Economic Recovery

Australian jobs surpassed expectations again in November, pushing the unemployment rate lower in a sign massive monetary and fiscal stimulus was bearing fruit after the country brought the coronavirus pandemic under control.

Figures from the Australian Bureau of Statistics (ABS) on Thursday showed employment jumped by a stellar 90,000 in November, following an equally impressive rise in October, and the jobless rate eased to 6.8%.

Economists polled by Reuters were predicting an addition of 50,000 jobs with the unemployment rate staying at 7%.

Daily Forecast

The NZD/USD was largely muted in response, as markets had factored in a strong recovery after a sharp contraction in the second quarter following COVID-19 restrictions.

“This is as close as you get to a true V-shaped recovery,” said Kiwibank Chief Economist Jarrod Kerr.

As for the AUD/USD, the employment data adds to evidence that Australia’s A$2 trillion ($1.52 trillion) economy is well on its way to recovery after slipping to its first recession in three decades earlier this year.