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James Hyerczyk

The Australian and New Zealand Dollars are trading mixed ahead of the U.S. opening. The Australian Dollar is trying to establish a support base after weaker-than-expected consumer inflation data triggered a steep sell-off on Wednesday. The New Zealand Dollar was punished by weak economic data to go along with its political uncertainty.

Earlier in the session, Australia released a report that showed a slight decline in import prices.


In New Zealand, the trade balance came in worse than expected at -1143 Million versus an estimate of -900 Million. However, the previous monthly figure was revised downward to -1179 Million.

In Australia, the Australian Bureau of Statistics said export prices dipped 3.0 percent on quarter in the third quarter of 2017. That beat forecasts for a decline of 4.0 percent following the 5.7 percent drop in the three months prior.

Import prices were down 1.6 percent on quarter, missing slightly forecasts for a decline of 1.5 percent following the 0.1 percent contraction in the second quarter.


In New Zealand, the trade deficit narrowed in September as the value of dairy exports rose, but was still wider than economists expected on both the monthly and annual basis.

The longer-term fundamentals remain bearish for both the AUD/USD and NZD/USD. The divergence between the central banks is the biggest reason for this. Short-term, we may be coming close to being oversold so we could see a short-covering rally. This is likely to set up another selling opportunity however.

We could also see a short-covering rally if President Trump chooses a less-hawkish Fed Chair, someone like Jerome Powell. Economist John Taylor is considered the most hawkish candidate.

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