AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Stumbles Amid News China Will Target Coal Exports

The Australian Dollar traded higher early Wednesday but ran into a wall of sellers at .6680, just slightly below the major March 9 top at .6685. The currency closed lower for the session, producing a potentially bearish closing price reversal top chart pattern.

We’ll know if the selling was profit-taking or shorting on Thursday if follow-through pressure takes out Wednesday’s low at .6568. The chart pattern doesn’t change the main trend to down, but it does indicate the selling may be greater than the buying at current price levels. This could trigger a 2 to 3 day counter-trend break.

At 02:14 GMT, the AUD/USD is trading .6630, up 0.0006 or +0.09%.

Australian Dollar

The whip-saw action in the Aussie that led to the reversal to the downside was fueled by changes in risk sentiment on Wednesday. Earlier in the session, demand for higher risk assets supported the currency. The catalyst behind the move was optimism over the opening of the global economy and talk of two potential vaccines for coronavirus. Later in the session, the Aussie tumbled from its high on concerns over escalating tensions between the United States and China.

There were other reports that the Australian Dollar turned sharply lower against the U.S. Dollar amidst signs China was looking to ramp up economic pressure on Australia. The potential restrictions on coal imports from Australia – which is Australia’s second largest export and earner of foreign exchange – follows similar more on retraining imports of Australia’s number one export:  iron ore, reported.

“If coal or iron ore, Australia’s biggest export goods, were considered to be the subjects of Chinese retaliation, the risk to the country’s economy and the AUD would be accentuated,” says Jane Foley, Senior FX Strategist at Rabobank.

New Zealand Dollar

The New Zealand Dollar is trading nearly flat early Thursday following yesterday’s potentially bearish closing price reversal top chart pattern.

On Wednesday, the Reserve Bank of New Zealand (RBNZ) released its Financial Stability Report and RBNZ Governor Orr gave a speech.

New Zealand’s financial system is in a solid position both to weather the significant economic impact caused by the COVID-19 pandemic and support recovery, the Central Bank’s governor said.

Adrian Orr also said in a financial stability report released on Wednesday that RBNZ economic stress test analysis suggests banks in the country can continue to lend and prosper through a broad range of adverse scenarios.

The RBNZ also said banks in the country have strong buffers of capital and liquidity, although their resilience will be tested in the coming months as loan losses rise from current low levels.

“Our economic stress test analysis suggest banks can continue to lend and prosper through a broad range of adverse scenarios,” RBNZ Governor Adrian Orr said in the financial stability report that it releases twice a year.

At 02:42 GMT, the NZD/USD is trading .6184, down 0.0005 or -0.08%.

For a look at all of today’s economic events, check out our economic calendar.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.