AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie, China Trade Balance Reports On-Tap

The Australian Dollar rose to a six-week high against the U.S. Dollar on Wednesday following the release of a surprisingly upbeat Q1 GDP report. The report showed that quarterly growth, at 0.3%, was in line with market expectations, however, many had adopted the view that the figure would be significantly weaker, based on comments from Reserve Bank of Australia officials on Tuesday. Ahead of the report, trader positioning in the market was leaning towards Australia recording a negative quarter of GDP growth.

On Wednesday, the AUD/USD closed at .7550, up 0.0044 or +0.58%.

The upbeat GDP news continued to benefit the Aussie throughout the session despite weakness across commodity markets like gold and crude oil. Iron ore prices, Australia’s largest goods export by dollar value, fell to a fresh 11-month low.

Early Thursday, investors will get the opportunity to react to the latest Trade Balance Data from Australia and China. The Australian report is expected to come in a 1.91 billion, lower than the previous 3.11 billion read. The report from China is expected to come in at 336 billion, up from the previous 262 billion. China’s USD-Denominated Trade Balance is expected to come in at 47.5 billion, up from 38.1 billion.

Based on the chart pattern, the AUD/USD may have trouble with a major retracement area at .7539 to .7589.

The New Zealand Dollar also continued to grind higher against the U.S. Dollar. The pace of the rally was much slower than previous days, which may have been tied to concerns over major global events taking place on Thursday, including elections in the U.K., a monetary policy announcement from the European Central Bank and the testimony of former Fed chief James Comey before the U.S. Senate Intelligence Committee.

The NZD/USD settled at .7197, up 0.0013 or +0.18%.

There were no major reports from New Zealand Dollar on Wednesday, but the currency continued to attract buyers due to an improving economy and a weaker outlook for U.S. Treasury yields.

Forecast

The direction of the AUD/USD on Thursday will be determined by trader reaction to the Australian Trade Balance at 0130 GMT and China’s Trade Balance report at 0230 GMT.

Both the Australian and New Zealand Dollars will primarily be driven by the direction of U.S. Treasury yields and their impact on the U.S. Dollar. We could see an increase in demand for higher risk yielding assets if Prime Minister Theresa May wins the election, the ECB is dovish and Comey says President Trump did not obstruct justice.