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AUD/USD and NZD/USD Fundamental Daily Forecast – Uptick in Demand for Risk Underpinning Aussie, Kiwi

By:
James Hyerczyk
Published: Oct 25, 2018, 10:53 UTC

In other news, earlier today, Stats New Zealand reported record imports in September which led to the largest-ever monthly goods trade deficit of $1.560 billion. Analysts were looking for a deficit of $1.365 billion. The previous month was revised better to -1.470 billion.

AUD/USD and NZD/USD

The Australian and New Zealand Dollar are recovering from early session weakness in reaction to increasing demand for higher risk assets. U.S. equity markets did not follow-through to the downside, following yesterday’s steep sell-off. This is helping to fuel an early short-covering rally which is helping to underpin the Aussie and Kiwi.

At 1034 GMT, the AUD/USD is trading .7080, up 0.0020 or +0.28% and the NZD/USD is at .6523, up 0.0001 or +0.01%.

Technical factors are also playing a role in today’s early strength. For the AUD/USD, buyers are coming in to defend the October 5 main bottom at .7042. The trend is down, but the Forex pair could strengthen if buyers can recover then sustain a rally over .7101.

For the NZD/USD, the chart pattern is a little more constructive. The short-term range is .6424 to .6607. Its 50% to 61.8% retracement zone is .6515 to .6494. This zone was tested earlier today and the selling stopped at .6503.

In other news, earlier today, Stats New Zealand reported record imports in September which led to the largest-ever monthly goods trade deficit of $1.560 billion. Analysts were looking for a deficit of $1.365 billion. The previous month was revised better to -1.470 billion.

This was the second consecutive record monthly trade shortfall.

In September 2018, imports rose $930 million or 19 percent on the same month last year to reach $5.9 million, the highest value for total imports on record. Exports were up $536 million or 14 percent to reach $4.3 billion.

According to the report, the leading contributor to the rise in total imports were petroleum and products, up $366 million or 87 percent from September last year. This increase was led by crude oil, up $278 million and fuels, up $86 million.

Australian and New Zealand Dollar traders will also get the opportunity to react to a number of U.S. economic reports on Thursday. The major report is on durable goods. Core Durable Goods Orders are expected to have risen 0.5%, up from 0.0%. Durable Goods Orders are expected to have fallen 1.3%, down substantially from last month’s 4.4% decline.

The Goods Trade Balance is expected to come in slightly better at -74.9 billion, up from -75.5 billion. Preliminary Wholesale Inventories are expected to have risen 0.5%. Pending Home Sales are expected to come in 0.1% lower.

Weekly Unemployment Claims are forecast at 214K, up slightly from last week’s 210K.

FOMC Members Clarida and Mester are also scheduled to speak.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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