AUD/USD and NZD/USD Fundamental Daily Forecast – Supported by Surge in Gold

The Australian Dollar reached a two-month high on Wednesday, led by higher prices for metals and oil. The commodity-driven currency hit its highest level since October 25, putting it in a position to end the year about 7 percent higher after posting losses in each of the past four years.

The AUD/USD settled at .7714, up 0.0075 or +0.98%.

New Zealand Dollar

The New Zealand Dollar advanced to its highest level since October 19, boosted by data last week that showed New Zealand’s economic growth beat expectations in the third quarter. New Zealand’s gross domestic product rose 0.6 percent in the three months ended September 30 with annual expansion at a healthy 2.7 percent.

The NZD/USD settled at .7061, up 0.0023 or +0.33%.

The Kiwi is in a position to close over 2.00 percent higher for the year. Nearly matching the previous year’s performance.

In other news, a drop in U.S. consumer confidence helped pressure U.S. Treasury yields on Wednesday. Consumer confidence slipped in December, down from 17-year highs in November. The Conference Board’s measure of consumer confidence declined to 122.1 in December, further than the 128.1 anticipated by economists polled by Reuters.

U.S. Home Sales stalled in November after huge climbs this fall, up 0.2 percent. The index was 0.8 percent higher compared to November 2016, the first annual gain since June. The number actually came in better than the -0.4% estimate, but lower than the previous 3.5% gain.

U.S. Treasury yields fell sharply, sending March 10-Year Treasury Note futures surging on Wednesday. The Australian Dollar was supported as the yield on its 10-year bonds widened against the yield on U.S. bond.

Global yield curves have been flattening as investors foresee rising benchmark rates in the near-term with latent inflation over the near-term.

Forecast

At 1026 GMT, the AUD/USD is trading .7792, up 0.0023 or +0.29% and the NZD/USD is at .7086, up 0.0025 or +0.35%. The Forex pairs are trading higher despite a slight rise in U.S. Treasury yields. However, the price action suggests Aussie and Kiwi investors are expecting Treasury yields to continue weaken and for commodities like metals and crude oil to continue to strengthen.

On the economic front, gold traders will get a chance to react to U.S. reports on Weekly Unemployment Claims, the Goods Trade Balance, Preliminary Wholesale Inventories and Chicago PMI.

Any data that drives Treasury yields lower will be supportive for the AUD/USD and NZD/USD.