AUD/USD and NZD/USD Fundamental Weekly Forecast – RBA Rate Decision, Australian GDP Major Events This Week

The Australian Dollar also posted a two-sided trade last week. It weakened when U.S. Treasury yields rose as the spread between U.S. Treasury Bonds and Australian Government Bonds tightened. And it strengthen when U.S. stocks rallied due to increased demand for higher-yielding assets. It was also supported late in the week by the disappointing U.S. jobs report.

The AUD/USD settled the week at .7966, up 0.0035 or +0.45%.

The only major economic report was Private Capital Expenditures. They rose more than expected by 0.8%. Some of the buying may have also been related to position-squaring ahead of next week’s Reserve Bank of Australia’s interest rate decision and monetary policy statement.

New Zealand Dollar

At times last week, the New Zealand Dollar was driven by U.S. Treasury yields, but the overall trend was controlled by comments from Reserve Bank of New Zealand Governor Graeme Wheeler.

The NZD/USD settled the week at .7154, down 0.0085 or -1.18%.

The New Zealand Dollar weakened after Wheeler said that a lower New Zealand Dollar was needed to help bolster the export sector and push up inflation. Wheeler also said there was a risk the housing market would take off again if the central bank removed its loan-to-value lending restrictions (LVRs), amid political pressure to rethink their use.

“The appreciation in the exchange rate has been a headwind for the tradables sector and, by reducing already weak tradables inflation, made it more difficult to reach the Bank’s inflation goals,” Wheeler said.

Forecast

The key news event this week is the Reserve Bank of Australia interest rate decision on Tuesday, September 5. The RBA will also issue a rate statement and RBA Governor Philip Low is scheduled to speech.

The RBA is expected to maintain its long-held neutral stance at its policy meeting on Tuesday, keeping its benchmark cash rate on hold for a 13^th straight month.

Early Wednesday, Australia will release its quarterly GDP report. Early Thursday, Australia will release its latest data on retail sales and trade balance.

The week ends with another speech by RBA Governor Philip Lowe.

Needless to say the Australia Dollar will be quite active.

There are no major reports from New Zealand but investors will likely react to the news events from Australia and the trade balance data from China early Friday.

The U.S. has a bank holiday on Monday so volume may be light. However, this could lead to increased volatility especially in reaction to the nuclear weapons test in North Korea.