AUD/USD and NZD/USD Fundamental Forecast – January 16, 2017

The Australian and New Zealand Dollars posted inside moves on Friday, but still managed to close higher for the session. The chart pattern suggest investor indecision and impending volatility.

The AUD/USD closed at .7498, up 0.0014 or +0.18%. The NZD/USD finished the week at .7125, up 0.0023 or +0.33%.

Both currencies finished surprisingly well, given weaker-than-expected economic data from China and stronger-than-expected reports from the U.S.

China’s trade balance for December came in at 40.82 billion, below the 46.50 billion forecast with exports slipping 6.1% on an annualized basis, worse than the forecasts for a fall of 3.5%. Exports rose 3.1%, better than the 2.7% estimate.

The mixed trade data from China caused some issues for Australian Dollar investors. In terms of the local currency, exports are still growing and imports not slowing as much as expected. This is good for the Aussie.

However, exports in dollar terms fell sharply. This may not be so good for the Australian market.

Even if the increase in imports is good for the Australian Dollar, a drop in commodity prices will suggest that perhaps the Chinese economy is slowing faster than expected. This will not be good news for Australia’s exports.

Perhaps confusion over how to read the report from China triggered the inside move on the charts.

In the U.S., Treasury yields rose, boosting the U.S. Dollar on firm retail sales data and better-than-expected producer prices.

Forecast

Today is a bank holiday in the U.S. so volume is expected to be light. There aren’t any major reports coming from the U.S. either, so investors are going to have to make their own market.

Traders will get the opportunity to react to the latest FPI report. This report measures the change in the price of food and food services purchased by households. A strong number is good for the currency. There is no estimate, but the previous report came in at -0.1%.

Australia is going to release the MI Inflation Gauge. The previous report came in at +0.1%.