AUD/USD and NZD/USD Fundamental Daily Forecast – Central Bank Divergence Weighing on Aussie, Kiwi

The Australian and New Zealand Dollars are trading lower during the U.S. session. The divergence between the U.S. Federal Reserve and the Reserve Bank of Australia and Reserve Bank of New Zealand is helping to put pressure on the Forex pairs.

At 1217 GMT, the AUD/USD settled at .7647, down 0.0008 or -0.11% and the NZD/USD closed at .6908, down 0.0017 or -0.25%.

Earlier in the session, Australia’s central bank said improved expectations for demand are driving a pickup in non-mining business investment, helping to buoy the post mining-boom economy.

“It now appears that there has been a solid upward trajectory in non-mining business investment over the past couple of years,” Reserve Bank of Australia Deputy Governor Guy Debelle said in a speech delivered in Sydney Monday.

Debelle also noted that some firms had been less willing to take risks since the financial crisis, choosing to reduce debt and increase cash holdings rather than invest.

Finally, Debelle added that expectations for demand around the world were also improving:  “With any luck, it will be sustained. This will be timely for the Australian economy as the mining investment story draws to its close.”

The U.S. releases its Federal Budget Balance later today at 1900 GMT. It is expected to come in at -58.2 Billion.

Early Tuesday, Australia will release its NAB Business Confidence report. The last report came in at 7, up from the previously reported 5. Anything above 9 indicates improving conditions.

Both Australian and New Zealand Dollar traders will get the opportunity to react to a series of key reports from China including Industrial Production, Fixed Asset Investment, Retail Sales and Foreign Direct Investment.

These reports may generate a mild reaction, but don’t expect a dramatic reaction in either market. Traders are more focused on the direction of U.S. interest rates and the Fed’s plan to raise rates in December and perhaps as many as three times in 2018.