AUD/USD and NZD/USD Fundamental Analysis – Forecast for the Week of April 24, 2017

The Australian and New Zealand Dollars closed mixed last week as each currency reacted differently to domestic data. Both were supported at times by a weaker U.S. and increased demand for higher risk assets.

The AUD/USD closed the week at .7543, down 0.0033 or -0.44%. The NZD/USD settled the week at .7027, up 0.0031 or +0.44%.

The Aussie was under pressure last week as investors reacted to the minutes of the Reserve Bank of Australia’s (RBA) April meeting which showed members discussed increased risks in the property market as well as employment figures that continue to disappoint.

The central bank sounded unexpectedly dovish which suggests the central bank is likely to maintain its neutral stance on interest rates. The minutes also suggested concerns about the inflation outlook are rising.

The Kiwi rose last week as investors reacted to stronger dairy prices and a sharp rise in consumer inflation.

Prices in the latest Global Dairy Trade (GDT) auction, the eighth sale of calendar 2017, rose 3.1 percent following a 1.7 percent gain previously and this was the third successive gain.

The NZD/USD picked up some buyers after the government reported consumer prices rose at their fastest annual pace in five-and-a-half years in the first quarter of 2017, marking the first time inflation has hit the mid-point of the central bank’s 1 percent-to-3 percent target range since September 2011.

The consumer price index rose 1 percent in the three months to March 31 for an annual pace of 2.2 percent.

Forecast

Ahead of the first major report this week on Tuesday, all eyes will be on the French presidential elections. Traders will be watching the numbers on Sunday/Monday because a surprise win by far-right candidate Marine Le Pen could produce a Brexit-like response in the financial markets.

On the Tuesday, the U.S. will report Conference Board Consumer Confidence. It is expected to come in slightly below the previous read at 123.7.

Early Tuesday, Australia will release its latest quarterly Consumer Inflation data. It is expected to show a rise to 0.6%, up from 0.5%. Trimmed Mean CPI is expected to come in at 0.5%, up from 0.4%.

Early Wednesday, Reserve Bank of Australia Governor Lowe is scheduled to speak. Check the daily commentary for the topic. The Trump Administration is also expected to release its long awaited tax reform plan. President Trump has promised it will be the biggest in history.

On Thursday, the U.S. will release a report on Durable Goods Orders. Expect it to show a 0.4% increase, down slightly from the previous 0.5%.  The U.S. will also report on Weekly Unemployment Claims.

Finally, on Friday, the U.S. will release a report on Advance GDP. It’s expected to show the economy’s growth slowed to 1.3%, down from the previous 2.1%.

Also on Friday, look for some heated discussion in Congress, because the U.S. government will officially close at midnight if spending isn’t extended.