AUD/USD and NZD/USD Fundamental Daily Forecast – Supported by Surge in Commodity Prices, Weak US Jobs Report

The Australian and New Zealand Dollars jumped against the U.S. Dollar on Friday, driven higher by surging commodity prices and a plunge in U.S. Treasury yields after the U.S. reported weaker than expected jobs growth. The Aussie spiked into its highest level since February 26, while the Kiwi soared to its highest level since March 3.

On Friday, the AUD/USD settled at .7844, up 0.0058 or +0.75% and the NZD/USD finished at .7283, up 0.0048 or +0.66%.

Surge in Iron Ore Underpins Australian Dollar

The Aussie has been supported by a strong rally in the prices of Australia’s top export earner, iron ore. Futures of the key steel making ingredient vaulted to a record high on Friday pushing spot prices to the highest-ever above $200 a tonne, Reuters reported.

China’s imports of iron ore are up 6.7% this year so far while those of natural gas has surged more than 22%. Both commodities are Australia’s top export earners.

China Import Growth Supports Both Aussie and Kiwi

The Aussie and Kiwi, traded as a liquid proxy for the Chinese Yuan, were also boosted by impressive trade data from China which showed import growth hitting a decade high.

China extended its impressive trade performance in April, with exports unexpectedly accelerating and import growth hitting a decade high, in a boost to the world’s second-largest economy.

Exports in dollar terms surged 32.3% from a year earlier to $263.92 billion, China’s General Administration of Customs said on Friday, beating analysts’ forecast of 24.1% and the 30.6% growth reported in March.

Imports were also impressive, rising 43.1% from a year earlier, the fastest gain since January 2011 and picking up from the 38.1% growth in March. It was also slightly faster than the 42.5% rise tipped by the Reuters poll, bolstered by higher commodity prices.

US Non-Farm Payrolls Surprise

U.S. Non-Farm Payrolls increased by only 266,000 jobs last month after rising by 770,000 in March, the Labor Department reported.

Economists polled by Reuters had forecast payrolls advancing by 978,000 jobs. The unexpected slowdown in job growth was likely due to shortages of workers and raw materials as the economy recovers from the coronavirus pandemic.

The benchmark 10-year yield, which dropped to 1.46%, the lowest since March 4, was last up 1.60 basis points on the day at 1.5771%, holding below a 14-month high of 1.776% reached on March 30.

The 30-year yield tumbled to its lowest level since March 1 at 2.158%. It was last 4.4 basis points higher at 2.28%.

After trading higher earlier in the session, the AUD/USD and NZD/USD rallied further on the drop in Treasury yields.