AUD/USD and NZD/USD Fundamental Weekly Forecast – Focus Will Be On Central Bank Speakers at Jackson Hole

The New Zealand Dollar posted a two-sided trade, erasing most of its earlier losses before finishing only slightly lower for the week.

The economic news from New Zealand was positive. Quarterly Retail Sales were up 2.0% and Core Retail Sales grew 2.1%. Quarterly PPI Input was up 1.4%. Quarterly PPI Output was up 1.3%. Both numbers were higher than the forecast. However, the news was not likely to change the Reserve Bank of New Zealand’s outlook for the economy or its decision to maintain neutral on interest rates.

The NZD/USD settled at .7310, down 0.0002 or -0.02%.

The Australian Dollar also posted a two-sided trade, but managed to close higher after trading lower early in the week. The price action was influenced by domestic news, the Reserve Bank of Australia and investor sentiment.

The AUD/USD settled at .7926, up 0.0036 or +0.46%.

The RBA meeting minutes said the central bank was pleased with the economy, but not enough to raise interest rates. It went on to say that its positive economic projections were not likely if the Australian Dollar remained at current price levels.

Finally, the Australian Employment Change report showed the economy added 27.9K jobs in July, higher than the 19.8K estimate. The Unemployment Rate was slightly lower at 5.6%. While impressive, these figures were not likely to change the RBA’s neutral stance.

Forecast

There are no major economic reports from Australia or New Zealand this week. Minor reports out of Australia include the Conference Board’s Leading Index. Minor reports out of New Zealand include the Visitor Arrivals, Credit Card Spending and the Trade Balance. The Trade Balance is expected to come in at -200 million. This report could move the markets.

The U.S. will report Durable Goods due on Friday. Core Durable Goods Orders are expected to come in at 0.4%. Durable Goods Orders are expected to come in at -5.7%.

Several Fed members are also scheduled to speak including FOMC Member Robert Kaplan on Wednesday and Fed Chair Janet Yellen on Friday.

The big event is going to be the central bankers’ Jackson Hole Symposium. It takes place on Thursday, Friday and Saturday.

The price action this week could be dictated by what the central bankers’ say at Jackson Hole especially European Central Bank President Mario Draghi and the Fed’s Janet Yellen. Yellen speaks at 1600 GMT on Friday and Draghi speaks at 1900 GMT on Friday.

The wildcards this week are President Trump and North Korea.

Barring any major outside events like last week, the focus will be on the direction of U.S. interest rates. At the start of the week, the Fed is mixed so the chances of the next Fed rate hike is about 50/50. The news events are unpredictable. However, if Trump says anything negative or the North Korean situation escalates then look for money to flow away from the higher risk Australian and New Zealand Dollars.  Draghi and Yellen could move the U.S. Dollar if they talk about monetary policy.