AUD/USD and NZD/USD Fundamental Forecast – January 31, 2017

The Australian and New Zealand Dollars traded nearly flat on Monday, but remain on track to post strong gains for the month. Both the Aussie and the Kiwi are up nearly 5 percent in January, making them among the best performing currencies in the Forex market.

Monday’s gains came on the back of flight-to-safety buying caused by backlash against President Donald Trump’s widely unpopular immigration policy.

The AUD/USD closed at .7553, up 0.0007 or +0.10%. The NZD/USD ended the session at .7285, up 0.0024 or +0.33%.

U.S. economic news was mixed on Monday. The Core PCE Price Index came in at 0.1%, matching estimates and the previous read.

Personal Spending came in higher than expected at 0.5%. This was above the 0.4% estimate and the previously reported 0.2%.

Personal Income came in lower than expected at 0.3%. Traders were looking for 0.4% after last month’s read was revised upward to 0.1%.

Pending Home Sales were up 1.6%, matching the estimate and well above the previous minus 2.5% read.

Forecast

Aussie and Kiwi traders will continue to focus on the price action in the global market place. Both currencies are expected to remain steady if the liquidation in the stock markets remain orderly. Of course, a lot will depend on what the U.S. Dollar does.

Earlier today, the Australian Dollar received a boost from a survey showing business conditions recovered strongly in December, while confidence remained steady. The NAB Business Confidence came in at 6, just like it did last month.

Business credit was also up, jumping 5.6 percent year-on-year in December. This was a strong indication that economic activity was picking up.

In New Zealand, the Visitor Arrivals report came in at minus 1.3%, below the previous month’s 0.4%. According to the report, annual visitor arrivals for 2016 numbered almost 3.5 million, setting a new record, according to Statistics New Zealand. This was a 12% increase from 2015.

The chart indicates the direction of the NZD/USD will largely be influenced by trader reaction to .7311. It could turn bearish on a trade through .7222. The AUD/USD turns bearish on a move through .7511 and bullish on a trade through .7608. Otherwise, look for a sideways trade.