The Australian and New Zealand Dollars posted a wicked two-sided trade, first driven higher by rapidly rising commodity prices then plunging in reaction to increasing U.S. interest rates, weaker than expected economic data from China, a drop in Chinese stocks and worries over trade tensions between the U.S. and China.
In Australia, the Reserve Bank of Australia Monetary Policy Minutes showed the central bank was in no hurry to raise rates. Additionally, The Employment Change report showed the hiring pace was slowing. The report showed the economy added 4.9K jobs in March, well below the 20.3K estimate.
In New Zealand, quarterly consumer inflation came in higher than expected at 0.5%. Traders were looking for a reading of 0.4%. Last quarter showed a 0.1% increase.
Making the dollar a more attractive asset was a steep rise in U.S. Treasury yields. High U.S. Treasury yields contributed to the rise in the dollar all week. U.S. 2-Year Treasury yields reached 2.453 percent on Friday, the highest level since September 2008. The dollar was also supported by a decline in the Euro, British Pound and Australian and New Zealand Dollars.
In other news, U.S. Retail Sales rose more than expected to 0.6%, versus a 0.4% estimate and much higher than the previously reported -0.1%. U.S. Building Permits came in at 1.35 million units, higher than the 1.33 million estimate.
The Australian and New Zealand Dollars are likely to continue to remain under the control of the U.S. Dollar and Treasury yields this week. Volatility is likely to be generated by geopolitical news regarding the potential trade war between the United States and China. Traders will also react to any news regarding the Chinese economy and stock market. Traders will also be watching the movement in the commodities markets especially industrial metals like aluminum, copper and iron ore.
In the U.S., economic data to be reported includes existing home sales on Monday, new home sales on Tuesday, and first quarter GDP on Friday. Traders will also get a chance to react to a report on consumer confidence as well as durable goods.
Early Tuesday, Australia will report quarterly consumer inflation. It is expected to rise 0.5%. Quarterly Trimmed Mean CPI is also expected to come in at 0.5%.