AUD/USD and NZD/USD Fundamental Weekly Forecast – Supported by Weak US Jobs Data, COVID Recovery Hopes

The Australian and New Zealand Dollars closed higher last week as signs of progress in both countries to reign in the pandemic raised hopes their economies were closer to reopening.

Last week, the Aussie advanced to its highest level since August 4, while the Kiwi tested a more than two-month high.

Australian Dollar Recap

Aussie Dollar sentiment improved as Australia’s Prime Minister Scott Morrison said economic reopening might be brought forward after securing a deal to double the stock of Pfizer doses, helping boost an already-ramped up vaccination rate.

At the current pace, around 80% of the adult population could be vaccinated by November, which would put the economy back on track by end of this year after a deep contraction was certain for the September quarter.

But with major cities still shut down, the markets are quite divided over whether the Reserve Bank of Australia (RBA) would stick with its decision to continue to pare back stimulus at Tuesday’s policy meeting, a Reuters poll showed.

Yields on Australia’s 10-year paper were up by 3 basis points this week as forecast-beating June quarter growth figures on Wednesday made it seem more possible that RBA would continue to taper.

New Zealand Dollar Recap

In New Zealand’s most populated city of Auckland, new daily COVID-19 cases fell to 27 from 49 the previous day, fueling hopes that it could be out of the strict lockdown soon like other cities where curbs were eased earlier this week.

The Pacific country’s control of the pandemic has polished its economic outlook and provided more room to the local central bank to hike rates at the October 6 meeting, which is likely to keep the Kiwi afloat.

Aussie, Kiwi Supported by Disappointing US Jobs Report

The biggest support for the Australian and New Zealand Dollars last week was the U.S. labor market report that showed the economy created the fewest jobs in seven months in August.

Data on Friday showed U.S. Non-Farm Payrolls increased by 235,000 jobs last month, the smallest gain since January, as hiring in the leisure and hospitality sector stalled amid a resurgence of COVID-19 infections, though other details of the report were fairly strong.

The unemployment rate fell to a 17-month low of 5.2% and July job growth was revised sharply higher. Wages increased a solid 0.6% and fewer people were experiencing long spells of unemployment.