AUD/USD and NZD/USD Fundamental Daily Forecast – Dip in Unemployment Rate Lowers Chances of Aussie Rate Cut

The Australian and New Zealand Dollars are trading mixed on Thursday in reaction to several key economic reports. The Aussie is being supported by a jobs report that indicated the employment situation was starting to stabilize. The news also trimmed the chances of a Reserve Bank rate cut in February that rose earlier in the week. In New Zealand, GDP rose more than expected, but traders weren’t moved by the news.

At 08:11 GMT, the AUD/USD is trading at .6877, up 0.0023 or +0.35% and the NZD/USD is at .6588, down 0.0001 or -0.01%.

Australian Unemployment Falls Unexpectedly

Australian unemployment fell unexpectedly, helped by booming growth in part-time employment.

According to the ABS, hiring increased by 39,000 during the month after seasonal adjustments, nearly triple the 15,000 increased expected by economists. Furthermore, with the participation rate holding steady at 66.0 percent, the boost in hiring was enough to see the national unemployment rate dip 0.1 percentage points to 5.2 percent. Economists were looking for unemployment to remain unchanged at 5.3 percent.

The prospects of another rate cut from the RBA in February dimmed following employment news with the odds of a rate cut at the RBA’s first meeting of 2020 falling to 44 percent from an earlier reported 63 percent.

New Zealand GDP Rises on Strength in Retail Consumption

New Zealand’s gross domestic product (GDP) increased 0.7 percent in the September 2019 quarter, and 2.7 percent over the year, boosted by retail spending, the country’s statistics department Stats NZ said on Thursday.

GDP growth for the September quarter has exceeded expectations, showing the economy is in good shape, Finance Minister Grant Robertson said.

“This shows the New Zealand economy is in good shape amid international headwinds like the uncertainty around Brexit and geopolitical tensions,” Robertson said.

“New Zealand is growing faster than the countries, we compare ourselves to, including Australia, the U.K., Canada, the EU, Japan, the OECD average and the U.S.,” Robertson said.

Traders showed limited reaction to the news because apparently they didn’t like the lower revision in the previous quarter to 0.1%.

Statistics NZ spokeswoman Ruvani Ratnayake could not rule out future significant revisions to the September growth data, including when it revised its annual benchmarks in a year’s time.

The quarterly figures Statistics NZ published used “the best possible data it had at that point in time”, she said.

Daily Forecast

Stronger-than-expected U.S. economic data earlier this week has investors thinking the Fed is unlikely to raise rates over the near-term. This helped drive U.S. Treasury yields higher on Wednesday, pressuring the Aussie and Kiwi.

On Thursday, investors will get the opportunity to react to U.S. economic data that includes the Philly Fed Manufacturing Index, Weekly Unemployment Claims, the Conference Board’s Leading Index and Existing Home Sales.

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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.