AUD/USD and NZD/USD Fundamental Daily Forecast – Both Currencies May Be Ripe for Short-covering Rally

The Australian and New Zealand Dollars continue to remain under pressure for various reasons early Monday. Both are being driven lower by rising U.S. Treasury yields due to increasing expectations for a Fed rate hike in December, easing concerns over U.S. tax reform and optimism that President Trump Fed Chair appointee will be hawkish.

At 1030 GMT, the AUD/USD is trading .7807, down 0.0007 or -0.09% and the NZD/USD is at .6960, up 0.0001 or +0.01%.

Additional selling pressure is hitting the Aussie Dollar due to position-squaring ahead of Tuesday’s quarterly consumer inflation. Political concerns continued to weigh on the Kiwi.

Forecast

Given the absence of fresh economic data, the direction of the AUD/USD and NZD/USD is likely to continue to be most influenced by the direction of U.S. Treasury yields. Rising yields will make the U.S. Dollar a more attractive investment.

Position-squaring ahead of the Australian inflation data on Tuesday could be supportive for the AUD/USD. Perhaps even enough to trigger a meaningful short-covering rally due to oversold technical conditions.

Oversold conditions could also boost the NZD/USD. Late Monday, the Kiwi is taking a breather since the sharp decline began with a surprise change in government was announced on October 19.

The recent steep price slide started after the announcement last Thursday that a new center-left government involving a coalition of three parties would take control from the center-right government which had led the country for nine years.

Basically, the longer-term fundamentals are bearish for the Australian and New Zealand Dollars, but over the short-run, the currencies may be ripe for a short-covering rally.