AUD/USD and NZD/USD Fundamental Daily Forecast – Underpinned by Positive Outlook for China from IMF

The Australian and New Zealand Dollars finished mixed on Monday as investors continued to digest the events from last week involving the Reserve Bank of Australia and whether it hinted in the minutes from its July monetary policy meeting that it was preparing to raise rates sooner than expected.

The AUD/USD settled at .7923, up 0.0011 or +0.14% and the NZD/USD closed at .7437, down 0.0016 or -0.22%.

Traders were also responding to dovish comments from an RBA official on Friday that strongly implied that investors had misinterpreted the minutes. The price action also indicates that investors were squaring positions ahead of key market-moving events over the next 48 hours.

Forecast

The AUD/USD and NZD/USD are trading higher early Tuesday, likely in response to the news that the International Monetary Fund (IMF) had upgraded its Gross Domestic Product (GDP) growth forecasts for the Chinese economy both this year and next.

Strength in crude oil futures and the iron ore spot market may have also helped underpin the Aussie.

Helping to put a lid on prices was better-than-expected economic data from the U.S. on Monday and a dampening of political concerns in the U.S. These events helped lift U.S. Treasury yields, which made the U.S. Dollar a more attractive investment.

Longer-term, the AUD/USD and NZD/USD are well supported because of the global economic expansion.

Short-term, Aussie investors will be watching closely the release of Australian CPI and a speech from RBA governor Philip Lowe on Wednesday, along with the U.S. Federal Reserve’s July monetary policy statement and interest rate decision.

In other news, investors will get the opportunity to react to the latest economic data on housing and manufacturing. The most important news is the Conference Board’s Consumer Confidence report. It is expected to come in slightly lower than the previous read at 116.5.

We could see another rangebound day as investors square positions ahead of Wednesday’s Australian CPI data and the Fed announcement.