AUD/USD and NZD/USD Fundamental Weekly Forecast –Trend May Be Your Friend During Holiday-Shortened Week

The Australian Dollar posted a two-sided trade before settling higher last week. Helping to drive the Aussie lower were dovish minutes from the Reserve Bank of Australia (RBA). Offsetting the move was stronger-than-expected employment data.

Minutes from a recent meeting by the Reserve Bank of Australia (RBA) showed the central bank’s willingness to move on monetary policy if necessary.

“The Board would continue to monitor developments in the labor market closely and adjust monetary policy if needed to support sustainable growth in the economy and the achievement of the inflation target over time,” the minutes showed. “Lower interest rates would provide more Australians with jobs and assist with achieving more assured progress towards the inflation target.”

In other news, Australia added 40,000 jobs in November to nearly 13 million, and the seasonally adjusted unemployment rate in Australia edged down 0.1 percentage point to 5.2% from the previous month, according to data released by the Australian Bureau of Statistics.

The minutes drove the Aussie lower as traders priced in a rate cut in February, however, the chances of a rate cut were reduced by the solid jobs report.

Last week, the AUD/USD settled at .6901, up 0.0025 or +0.36%.

New Zealand Dollar

The New Zealand Dollar was whip-sawed a little by the news from Australia, but better-than-expected ANZ Business Confidence and GDP reports helped stabilize the currency into its weekly close.

The NZD/USD settled at .6603, up 0.0012 or +0.19%.

The ANZ Business Confidence report came in at -13.2, an improvement from the previously reported -26.4.

New Zealand’s gross domestic product (GDP) increased 0.7 percent in the September 2019 quarter, and 2.7 percent over the year, boosted by retail spending, the country’s statistics department Stats NZ said.

GDP growth for the September quarter has exceeded expectations, showing the economy is in good shape, Finance Minister Grant Robertson said.

Forecast

We’re not expecting much meaningful price movement this week from the AUD/USD and NZD/USD this week due to bank holidays on December 24 and December 25. The U.S. will also be on bank holiday on December 25. Volume is expected to be extremely low so be careful buying strength and shorting weakness, the conditions are ripe for bull and bear traps.

The AUD/USD and NZD/USD daily trends are up so it may be a good idea to trade with the trend, however, there aren’t any major economic data releases this week, which means few catalysts to drive the price action.