AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Getting Boost From Firm Crude Prices

The Australian and New Zealand Dollars are inching higher against the U.S. Dollar early Monday. Volume is light as investors await a key report from the U.S. government. The Forex pairs are being supported by higher crude oil prices since they are commodity-linked currencies.

Lower U.S. Treasury yields are also helping to underpin the Aussie and the Kiwi. Yields have been trending lower since early last week. The catalyst behind the weakness is concern over the Fed’s ability to raise interest rates later in the year due to worries over slow growth and weakening inflation.

At 0530 GMT, the AUD/USD is trading .7577, up 0.0009 or +0.12% and the NZD/USD is trading .7282, up 0.0001 or +0.02%.

Forecast

There were no major reports out of Australia and New Zealand early Monday so the price action is being controlled by the rally in crude oil. The AUD/USD is being especially sensitive to the move in crude after selling off last week in reaction to a steep plunge in oil prices.

The NZD/USD is having a limited reaction to the rally in crude, but investors may be shying away ahead of Tuesday’s Trade Balance report.

The key reports on Monday are Core Durable Goods Orders and Durable Goods Orders. Treasury yields are likely to respond to these reports which will influence the movement in the U.S. Dollar. Aussie and Kiwi traders will then react to the direction of the dollar.

According to estimates, Core Durable Goods Orders are expected to come in at 0.4%, up from minus 0.5%. Durable Goods Orders are forecast to come in at minus 0.5%, slightly better than the previously reported minus 0.8%.

U.S. Treasury yields should respond positively to better-than-expected data. This should help boost the dollar while limiting the gains in the Australian and New Zealand Dollars. These currencies could break if the numbers trounce the forecast.

Look for the AUD/USD and the NZD/USD to firm if the data comes in lower-than-expected. Yields should fall on the news, making the U.S. Dollar a less-desirable investment while boosting long interest in the two currencies.