AUD/USD and NZD/USD Fundamental Forecast – April 24, 2017

Greater demand for risky assets is expected to drive the Australian and New Zealand Dollars higher early Monday as investors react to exit polls in France.

According to reports, voters in France have sent far-right populist Marine Le Pen and political novice Emmanuel Macron through to the second round of the country’s presidential election, according to early results.

The government is saying that with 86% of polling stations declared, National Front leader Le Pen and newcomer Macron were virtually neck-and-neck on about 23% of the vote each.

Investors are leaving safe haven assets like gold, the Japanese Yen and U.S. Treasuries. Money is flowing out of these markets and into the higher-yielding global equity markets. The sell-off in U.S. Treasuries is helping to push up yields which is making the U.S. Dollar a more attractive investment.

The rising U.S. Dollar may put a lid on the Aussie and Kiwi, but at least on the opening investors are coming into the Australian and New Zealand Dollars to take advantage of their higher yields.

U.S. equity markets are expected to post strong gains on the opening early Monday. If the indexes “gap and go” then expect the AUD/USD and NZD/USD to follow it higher.

Aussie traders should watch trader reaction as the market approaches the recent top at .7610. If buyers can take it out with conviction then look for the Forex pair to continue to jump higher. A failure at this price will mean that the selling is still greater than the buying.

Kiwi traders should watch the price action and order flow as the market approaches the recent top at .7052. If the buying is strong enough to take out this price then the trend will turn up on the daily chart. This will put the market on course for a test of .7089. If the buying dries up as the market approaches this level then it will mean that sellers are still in control.

Rising U.S. Treasury yields at a time when the Reserve Bank of Australia and the Reserve Bank of New Zealand are holding rates steady may make the U.S. Dollar attractive today which could kill the rally in the AUD/USD and NZD/USD.

Traders are going to have to decide whether to react to rising U.S. Treasury yields or greater demand for risky assets.