AUD/USD and NZD/USD Fundamental Weekly Forecast – Low U.S. Holiday Volume Could Skew the Price Action This Week

Traders will be keeping an eye on news regarding the progress of U.S.-China trade talks, but low U.S. holiday volume is likely to hold Aussie and Kiwi prices in a tight trading range.
James Hyerczyk

The Australian and New Zealand Dollar finished mixed last with the Aussie being drilled lower by dovish central bank minutes. Uncertainty over the path of interest rates held the Kiwi in a tight range. Both currencies were capped by worries over the U.S.-China trade deal. The direction of the Aussie and Kiwi were also impacted by U.S. economic data.

Last week, the AUD/USD settled at .6786, down 0.0035 or -0.51% and the NZD/USD finished at .6405, up 0.0003 or +0.04%.

Australian Dollar

The Reserve Bank of Australia (RBA) minutes from its monetary policy meeting on November 5, revealed the Board was mindful that rates were already low and that each further cut brings closer the point at which other policy options come into play.

Traders read the summary to mean the central bank might stand on the sideline for some time. However, the minutes revealed that the members remained concerned about sluggish economic developments despite previous rate cuts.

New Zealand Dollar

The New Zealand Dollar traded mostly flat last week as investors seemed to shrug off the latest developments over the trade deal. The price action also suggests that the major banks still haven’t figured out the next move by the Reserve Bank of New Zealand (RBNZ) after central bank policymakers surprised the markets by keeping rates on hold at the policy meeting on November 12.

Putting a lid on the Kiwi were comments from the RBNZ and the RBA which traders took to suggest both are more dovish than previously thought.

RBNZ Assistant Governor Christian Hawkesby reiterated that the economy was in good shape but the Bank was prepared to ease again if needed. Hawkesby highlighted the importance of the global outlook to the Bank’s policy deliberations.

Weekly Forecast

Traders will be keeping an eye on news regarding the progress of U.S.-China trade talks, but low U.S. holiday volume is likely to hold Aussie and Kiwi prices in a tight trading range.

Despite a week filled with a slew of negative headlines regarding U.S.-China trade relations, in my opinion, the only ones to be concerned about are the positive comments at the end of the week.

Furthermore, on Thursday, Gao Feng, China’s Ministry of Commerce spokesman said, “external rumors” about trade talks are not accurate, and noted the two trade delegations remain in close communication.

Shortly afterwards, there was a report that China invited the U.S. trade delegation to Beijing for face-to-face talks. President Trump then told Fox News both sides were “very close,” and Chinese President Xi Jinping told a visiting U.S. business delegation that China holds a “positive attitude” toward the trade talks.

Aussie traders are likely to react to comments from RBA Governor Philip Lowe on Tuesday, a Construction Work Done report on Wednesday and a Private Capital Expenditure report on Thursday.

Kiwi traders will be watching a speech by RBNZ Governor Orr on Wednesday and a report on ANZ Business Confidence on Thursday.

Thursday is also U.S. bank holiday so expect trading volume to taper off throughout the week.

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