AUD/USD and NZD/USD

AUD/USD and NZD/USD Fundamental Daily Forecast – Australian Consumer Inflation Mixed

The Australian and New Zealand Dollars are trading mixed early Tuesday. The Aussie is trading slightly better in response to mixed economic data. The Kiwi is being pressured by rising U.S. interest rates and weaker than expected economic data.

At 0510 GMT, the AUD/USD is trading at .7604, up 0.00005 or +0.01% and the NZD/USD is at .7116, down 0.0031 or -0.43%.

AUDUSD
Daily AUD/USD

The Australian Quarterly Consumer Inflation figures came out mixed early Tuesday, which likely means the Reserve Bank of Australia will continue to be in no hurry to raise rates. Quarterly CPI rose 0.4% versus a 0.5% estimate. The previous quarter showed a 0.6% increase. Quarterly Trimmed Mean CPI met expectations with a reading of 0.5%. This was slightly above the previously reported 0.4%.

Both consumer inflation figures come in below the RBA’s 2.0% target which means the central bank is unlikely to raise rates anytime soon.

In other news, the Conference Board’s Leading Index came in at 0.3%, better than the previously reported minus 0.3%.

In New Zealand, the Visitor Arrivals report showed a 2.1% decline. This was down from the previously reported 3.6%.

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Daily NZD/USD

Forecast

The AUD/USD and NZD/USD are likely to continue to remain under pressure over the near-term, however, we do expect to see periodic short-covering rallies due to technically oversold conditions.

The stable outlook for the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) contrasts with the U.S. Federal Reserve which is expected to raise rates at least two more times this year.

In the U.S., inflation expectations are on the rise as well as U.S. Treasury yields with the benchmark 10-year Treasury note sitting just below the psychological 3.00 percent level. The tightening of the interest rate differential between U.S. Government Bonds and Australian and New Zealand Government Bonds is driving the price action and making the U.S. Dollar a more attractive investment.

In the U.S. on Tuesday, traders will get a chance to react to a series of economic reports, including the monthly Home Price index, the yearly S&P/CS Composite-20 Home Price Index, the Conference Board’s Consumer Confidence, New Home Sales and the Richmond Manufacturing Index.

Australia and New Zealand will be on bank holiday on Wednesday.

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.