The Australian and New Zealand Dollars are trading mixed early Wednesday. Both markets are primarily reacting to domestic news.
At 0420 GMT, the AUD/USD is trading .7580, down 0.0027 or -0.35% and the NZD/USD is at .6902, up 0.0026 or +0.39%.
The Aussie is under pressure after the quarterly GDP report missed the estimate. Australia’s economy grew 0.6 percent in seasonally adjusted terms for the September quarter, following a 0.9 percent increase in the April-June period, according to the country’s Bureau of Statistics. Traders were looking for 0.7 percent growth in the quarter.
Earlier in the week, the Reserve Bank of Australia left its benchmark interest rate unchanged at a record low of 1.5 percent. In its policy statement, the central bank said it expected the economy to grow on average around 3 percent over the next few years, with an improved outlook for non-mining business investment and increased public infrastructure investment.
The RBA policy statement on Tuesday drove the AUD/USD to its highest level since November 13. The move was fueled by the central bank’s optimism over the economy. Today’s sell-off has erased all of those gains, indicating that investors have a few doubts about the RBA’s forecast.
The Australian Bureau of Statistics data showed Australia’s economy grew 2.8 percent over the year.
The NZD/USD is being helped by a recovery in the GDT Price Index. It rose 0.4% for its first gain since September 19. The daily chart indicates that a support base may be building. Overcoming .6904 will indicate the buying is getting stronger. A trade through .6944 will change the trend to up. This could trigger an acceleration into .6944.
Although the focus has been on domestic data this week, Aussie and Kiwi investors will get the opportunity to react to a slew of U.S. economic data on Wednesday. Included in this list is the ADP Non-Farm Employment Change report. It is expected to show the private sector of the economy added 189K jobs. This is down from the previous 235K.
The AUD/USD could be pressured further and the NZD/USD gains could be limited by a rise in U.S. Treasury yields in reaction to a bullish ADP report. However, a steep sell-off in U.S. equity markets could be supportive.
This article was originally posted on FX Empire
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