Yahoo Finance AUD/USD and NZD/USD Fundamental Daily Forecast – Australian Retail Sales Beat Expectations
The Australian and New Zealand Dollars rose against the U.S. Dollar on Tuesday, benefitting from renewed interest in investor risk appetite. Aussie traders shrugged off the Reserve Bank of Australia’s decision to leave rates unchanged. Additionally, it signaled in its statement that it was in no hurry to raise rates.
The AUD/USD settled at .7683, up 0.0023 or +0.31% and the NZD/USD finished the session at .7255, up 0.0041 or +0.57%.
In New Zealand, the GDT Price Index came in at -0.6%. The previous read was -1.2%.
There were no major economic reports on Tuesday. Minor reports included IBD/TIPP Economic Optimism which came in below expectations at 52.6. Total Vehicle Sales were up 17.5 Million.
Late Tuesday, Fed Governor Lael Brainard said in a speech that even with this year’s correction, stocks and other assets are still high by historical standards.
“Valuations in a broad set of markets appear elevated relative to historical norms, even after taking into account recent movements,” Brainard said during a speech in New York, according to prepared remarks.
Forecast
The Aussie and Kiwi are trading higher early Wednesday. Oversold conditions may be helping to underpin the currencies. Most traders believe that gains will be capped over the near-term due to rising U.S. interest rates and geopolitical concerns over a possible trade war between China and the United States.
In Australia, Retail Sales rose 0.6% versus an estimate for a 0.3% rise. Last month’s report was revised higher to 0.2%.
The good news about retail sales may have been offset by a greater than expected drop in Australian Building Approvals. They came in down 6.2% versus a -5.1% estimate. This wasn’t much of a surprise since the previous month posted a robust 17.2% gain.
Although we are seeing a short-covering rally in the Australian Dollar early Wednesday, the good news about retail sales is not likely to sway the RBA the next time it meets. It is basing its decision to leave interest rates at historically low levels due to low wage growth and a weak housing market.
Traders will continue to monitor the trade situation between China and the U.S. If tensions escalate further and lead to an all-out trade war, then all industries in Australia and New Zealand stand to lose. This would put additional pressure on currencies that are already being pushed down by rising U.S. rates.
In other news, China’s Caixin Services PMI came in at 52.3, below the 54.5 estimate and 54.2 previous read.
In the U.S., traders will get the opportunity to react to a slew of economic data including the ADP Non-Farm Employment Change report which could give us an indication of what to expect from Friday’s U.S. Non-Farm Payrolls report.
The next major report on Wednesday will be ISM Non-Manufacturing PMI. It is expected to come in at 59.0, slightly below the previously reported 59.5.
Finally, Factory Orders are expected to show a 1.7% rise, coming in better than the previously reported -1.4%. Cleveland Fed President Loretta Mester is also scheduled to speak.
This article was originally posted on FX Empire
