AUD/USD and NZD/USD Fundamental Daily Forecast – Weak US Dollar Fuels Short-Covering Rally

The Australian and New Zealand Dollars closed sharply higher on Thursday as traders came in to defend the currencies against another multi-month low. The strength was likely fueled by a combination of aggressive counter-trend buyers looking for value and profit-taking following a prolonged move down in terms of price and time.

On Thursday, the AUD/USD settled at .7225, up 0.0050 or +0.69% and the NZD/USD finished at .6898, up 0.0033 or +0.47%.

The strength in the Aussie and Kiwi was primarily driven by notable weakness in the U.S. Dollar. The greenback moved lower on Thursday, pressured some by a rise in U.S. weekly jobless claims, with investors likely booking profits after a steep rise throughout the week and some end-of-the-month/quarter position-squaring.

Helping to pressure the AUD/USD and NZD/USD most of the week was a spike in U.S. Treasury yields amid expectations the Federal Reserve will taper its monetary stimulus beginning in November and perhaps raise its benchmark interest rate as early as 2022.

Thursday’s U.S. economic data, though, dented some of the U.S. Dollar’s strength as well as Treasury yields.

Initial jobless claims climbed again last week, rising to 362,000, the Labor Department said Thursday, as hiring appeared to remain sluggish while the U.S. battles the delta variant.

Economists surveyed by Dow Jones had been expecting 335,000 new filings, the same number as the upwardly revised total from the previous week. A surge in claims from California helped account for much of the gains.

A separate report from the Commerce Department on Thursday showed the economy grew at a slightly faster 6.7% annualized rate in the second quarter, revised up from the 6.6% pace reported in August. Growth was driven by pandemic relief money from the government, which boosted consumer spending. The economy grew at a 6.3% rate in the first quarter.

New Zealand:  New Home Building Reaches Another Record High

Government support for the building sector continues to shine through in the latest consent numbers, showing more homes are being built than ever before, says Minister for Building and Construction Poto Williams.

“For the sixth month in a row, the annual number of residential building consents have reached another all-time high,” Poto Williams said.

Estimates from Statistics New Zealand released today show the number of new homes consented in the year ended June 2021 is at a record high of 46,453. This is an increase of 24 percent from the August 2020 year.

Australia:  Building Approval Figures Continue to Rise for residential and Multi-Unit Dwellings

Building approvals rose for August in most states, reflecting a strong demand for housing despite the end of stimulus measures in March.

Residential dwelling approvals increased by 33.7% in the three months to August, according to the Australia Bureau of Statistics.