AUD/USD and NZD/USD Fundamental Daily Forecast – RBA Minutes Signal More Easing; NZ Consumer Sentiment Slips Again

We’re not expecting too much movement ahead of the Fed’s interest rate and monetary policy decisions on Wednesday. Both the AUD/USD and NZD/USD are expected to remain under pressure because the Reserve Bank of Australia and the Reserve Bank of New Zealand are expected to cut interest rates in the near future. The Fed is not expected to cut rates in June, but its monetary policy statement should open the door for rate cuts in either July or September.
James Hyerczyk
AUD/USD and NZD/USD

The Australian and New Zealand Dollars are trading mixed Tuesday ahead of the start of the U.S. Federal Reserve’s two-day policy meeting. Earlier in the session, the Reserve Bank of Australia released the minutes of its June 3 monetary policy meeting.

At the meeting, the RBA lowered its benchmark interest rate by 25 basis points to 1.25 percent for the first time in almost three years. At the time, the Board said it made this decision to support employment growth and provide greater confidence that inflation will be consistent with the medium-term target.

At 06:11 GMT, the AUD/USD is trading .6838, down 0.0014 or -0.22% and the NZD/USD is at .6496, up 0.0002 or +0.03%.

RBA Minutes Summary

Given the rate cut, the RBA minutes revealed no surprises with policymakers stating it’s “more than likely” they’ll have to ease further in the period ahead.

A summary of the minutes shows:

  • Members judged that a decline in interest rates was unlikely to encourage a material pick-up in borrowing by households that would add to medium-term risks in the economy.
  • Risks to the forecasts for growth and inflation in both directions.
  • It was more likely than not that a further easing in monetary policy would be appropriate in the period ahead.
  • Lower interest rates were not the only policy option available to assist in lowering the rate of unemployment
  • In assessing whether further monetary easing was appropriate, developments in the labor market would be particularly important.
  • In other news, the quarterly Home Price Index came in at -3.0%, worse than the -2.5% forecast.

New Zealand News

In New Zealand, Westpac Consumer Sentiment came in at 103.5, slightly lower than the previously reported 103.8.

“Today’s survey highlights that the New Zealand economy has slowed, and households are feeling it,” said Westpac’s Chief Economist Dominick Stephens. “Much of the economic growth that we have seen in recent years has actually been a result of strong population growth. However, on a per capita basis, economic growth has been slow.”

“Individual households are finding that they’re not getting much better off,” noted Mr. Stephens. “They are worried about their financial situation, and that nervousness has seen them rein back their spending.”

“While overall confidence is down, there are some notable differences across household groups. In particular, older New Zealanders are telling us that they are concerned about the economy’s direction, while younger New Zealanders are more upbeat,” commented Mr. Stephens. “In part these differences may be related to developments in the housing market. The slowdown in house price growth over the past year has been a concern for many existing homeowners. However, for many younger New Zealanders, those same developments mean that home ownership is now looking more affordable.”

Daily Forecast

We’re not expecting too much movement ahead of the Fed’s interest rate and monetary policy decisions on Wednesday. Both the AUD/USD and NZD/USD are expected to remain under pressure because the Reserve Bank of Australia and the Reserve Bank of New Zealand are expected to cut interest rates in the near future.

The Fed is not expected to cut rates in June, but its monetary policy statement should open the door for rate cuts in either July or September.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All

Top Promotions

Top Brokers

IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US