FXEMPIRE
All

AUD/USD and NZD/USD Fundamental Daily Forecast – Weak NZ Business Confidence Opens Door to Possible Rate Cut

Driving the price action in the Australian Dollar today is the RBA’s interest rate decision. The central bank held its cash rate steady at 1.50 percent on Tuesday as widely expected. It also reiterated comfort with policy settings while noting weakness in the housing market as well as tighter credit conditions. In New Zealand, the Kiwi was being pressured by a report that showed business confidence sank to a nine-year low in the third quarter.
James Hyerczyk
AUD/USD and NZD/USD
AUD/USD and NZD/USD

Domestic economic news is helping to pressure the Australian and New Zealand Dollars early Tuesday. The currencies were already weaker at the start of the session due to expectations of rising U.S. interest rates and weak economic data from China and signs of continued strength in the U.S. economy.

The longer-term fundamentals are bearish and today’s reports take the steam out of any attempt at a counter-trend rally.

Essentially, the Aussie and Kiwi are being pressured by the widening of the spread between U.S. Government bond yields and Australian and New Zealand Government bond yields. This is being caused by the divergence in monetary policies between the hawkish U.S. Federal Reserve and the dovish Reserve Bank of Australia and the dovish Reserve Bank of New Zealand.

At 0615 GMT, the AUD/USD is trading .7198, down 0.0028 or -0.35% and the NZD/USD is at .6592, down 0.0023 or -0.35%.

Forecast

Both the AUD/USD and NZD/USD are testing key technical areas on the daily chart. Trader reaction to these areas will determine the near-term direction of the Forex pairs. For the AUD/USD, the key area to watch is .7200 to .7172. The NZD/USD key area is .6600 to .6576.

Counter-trend buyers could come in on a test of these areas, but if they fail then look for another acceleration to the downside.

Driving the price action in the Australian Dollar today is the RBA’s interest rate decision. The central bank held its cash rate steady at 1.50 percent on Tuesday as widely expected. It also reiterated comfort with policy settings while noting weakness in the housing market as well as tighter credit conditions.

Most investors are not expecting a move in interest rates until the end of next year. In a statement accompanying the decision, Governor Philip Lowe said he expects to see further progress in reducing employment and returning inflation to target, but that progress “is likely to be gradual”.

In New Zealand, the Kiwi was being pressured by a report that showed business confidence sank to a nine-year low in the third quarter. Traders are selling the NZD/USD because this news leaves open the door to a possible rate cut in the coming quarters if economic growth cools sharply.

The New Zealand Institute of Economic Research’s (NZIER) quarterly survey of business opinion showed a net 30 percent of firms surveyed expected general business conditions to deteriorate compared with 20 percent in the previous quarter.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US