AUD/USD and NZD/USD Fundamental Daily Forecast – Stable Greenback Caps Aussie, Kiwi

The Australian and New Zealand Dollars broke out of a tight range to hit three-week highs last week as their U.S. counterpart extended its broad retreat and upbeat data suggested the Australian economy had grown strongly last quarter. The Kiwi just went along for the ride as a dovish central bank and business survey pointed toward a weak economy. On Friday, both currencies suffered small losses as traders squared positions ahead of the weekend.

On Friday, the AUD/USD settled at .7734, down 0.0017 or -0.22% and the NZD/USD finished at .7146, down 0.0025 or -0.35%.

US Economic News

The Aussie and Kiwi were pressured on Friday as U.S. Treasury yields rebounded after the 10-year rate slipped to 1.53% in the previous session. The move helped stabilize the U.S. Dollar, which had been down most of the week.

The yield on the benchmark 10-year Treasury note rose to 1.587%. The yield on the 30-year Treasury bond climbed to 2.275%. The 10-year Treasury yield recently dropped 1.7%, while the 30-year government bond rate traded above 2.5%, amid concerns about rising inflation.

Housing starts jumped 19.4% month-over-month in March, according the Commerce Department, while building permits rose 2.7%. The University of Michigan’s consumer sentiment index rose in April to 86.5 from 84.9 a month prior.

On Thursday, data from the Commerce Department showed U.S. retail sales jumped 9.8% in March. This was well above the Dow Jones estimate of 6.1% growth. Meanwhile, the Labor Department reported that there were 576,000 new jobless claims filed for the week ended April 10. This was the lowest number of new weekly unemployment insurance claims since March 2020 and well below the 710,000 forecast by economists.

New Zealand Economic News

The Business NZ Purchasing Managers’ Index (PMI) came in at 63.6, up 9.4 points from February, and the highest monthly result since the survey began in 2002.

BusinessNZ’s executive director for manufacturing Catherine Beard said, “The two major sub-index values of Production (66.8) and New Orders (72.5) were the main drivers of the March result, with the latter experiencing its first post 70-point value. This does not indicate a swift shift in demand over a relatively short time, which may indicate a move towards previously shelved projects and business ventures that have now been given the green light.”

“Given the strong March result, the proportion of those outlining positive comments increased significantly from 46% in February to almost 58% in March. Unsurprisingly, comments were centered towards increased demand both domestically and offshore”.

BNZ Senior Economist Doug Steel said, “More demand is one thing, but meeting it is another. Firms have faced many supply-side challenges. In this regard, it is interesting to see PMI deliveries of raw materials lifted strongly, to 62.8 this month. That coincides with other data showing imports leapt more than 17% above year earlier levels in March following prior weakness”.