AUD/USD and NZD/USD Fundamental Daily Forecast – Trading Mixed on Low Volume

The Australian Dollar is trading lower against the U.S. Dollar on Monday shortly before the open of the U.S. session. The Forex pair failed to take out Friday’s high and the lower low has made .7874 a new minor top. Last week’s high at .7874 fell short of the October 13 main top at .7897.

At 1137 GMT, the AUD/USD is at .7840, down 0.0022 or -0.28%. The NZD/USD is at .7180, up 0.0013 or +0.18%.

The Aussie is under pressure because of a slight drop in demand for higher risk assets. Rising U.S. Treasury yields are also tightening the spread between U.S. Government Bonds and Australian Government Bonds. This is helping to make the U.S. Dollar a more attractive asset.

The NZD/USD is threatening to overcome last week’s high at .7186 and a major 50% level at .7188.

Earlier in the session, the Australian AIG Construction Index came in at 52.8, down from 57.5.

Forecast

Aussie and Kiwi investors will be monitoring the price action in key commodities such as gold and copper. Both may feel pressure if these two markets weaken.

Traders are also saying the pressure could come from a drop in the Thomson Reuters core commodity CRB Index. Bearish investors believe the index may have topped on Friday when it gapped lower after quite a few increases took it to new highs. The chart pattern suggests a reversal top may be forming.

Today, investors will get the opportunity to react to speeches from FOMC Members Raphael Bostic and John Williams. The AUD/USD and NZD/USD could break if hawkish commentary drives up U.S. Treasury yields and consequently the U.S. Dollar. This could put pressure on dollar-denominated commodities.

We could see a drop in volume and volatility this week due to reports on U.S. retail sales and consumer inflation on Friday.