AUD/USD and NZD/USD Fundamental Daily Forecast – Gains Being Capped Amid Weaker Global Equity Markets

The Australian and New Zealand Dollars are trading lower on Friday, pressured by a drop in demand for higher risk currencies that is being fueled by a plunge in global equity markets.

The Aussie and Kiwi are being underpinned, however, by a weaker U.S. Dollar. Meanwhile, the Covid situation in Australia is worsening, raising fears that the country will experience another virus-related contraction during the third quarter.

At 08:00 GMT, the AUD/USD is trading .7391, down 0.0002 or -0.03% and the NZD/USD is at .7006, down 0.0003 or -0.03%.

Global Stock Market Weakness Fueling Lower Demand for Risky Currencies

Futures contracts tied to the major U.S. stock indexes fell early Friday as a soft earnings report from Amazon threatened to dampen an otherwise strong month ahead of July’s final day of trading.

European stocks retreated Friday as investors reacted to another deluge of corporate earnings and economic data.

Shares in Asia-Pacific declined again on Friday, heading for their worst month since March 2020, as volatile trading continued for Chinese tech stocks and Hong Kong’s Hang Seng index tumbled.

The S&P/ASX 200 in Australia closed 0.33% down to 7,392.60. Markets will be tracking the Covid situation in Sydney, which reported a record daily rise in Covid cases Thursday despite an extended lockdown. Reuters reported that authorities have requested help from the military in enforcing the lockdown.

New Zealand Building Consents Rise in June

The number of new dwelling consents approved in New Zealand rose a seasonally adjusted 3.8 percent in June compared with a 2.4 percent drop in the previous month, data from Statistics New Zealand showed on Friday.

Excluding apartments, flats, and retirement village units, the number of consents for new houses was up 0.1 percent.

Building consents were 24.0 percent higher than the same month a year ago.

Australian Economic Data

Australia’s Q2 Producer Price Index (PPI) rose 0.7% on a quarterly basis, beating the 0.4% growth in Q1. The Private Sector Credit rose 0.9% in June.

US Set to Release Slew of Economic Reports

At 12:30 GMT, traders will get the opportunity to react to U.S. reports on Core PCE Prices, Personal Income and Personal Spending. These reports can move the U.S. Dollar.

Core PCE Inflation is expected to show a 0.6% rise for the month. Personal Income is expected to have declined by 0.4%, while Personal Spending is expected to have risen 0.7%.

At 13:45, the Chicago PMI report is expected to come in at 64.2, down from 66.1.

At 14:00 GMT, Revised University of Michigan Consumer Sentiment is expected to come in unchanged at 80.8.

The direction of the AUD/USD and NZD/USD on Friday will be determined by whether risk sentiment is on or off.

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.