Yahoo Finance AUD/USD and NZD/USD Fundamental Daily Forecast – Big Trade Report Miss Weighing on Aussie Dollar
The Australian and New Zealand Dollars declined on Thursday in reaction to the divergence between the hawkish policy of the U.S. Federal Reserve and the dovish policies of the Reserve Bank of Australia and the Reserve Bank of New Zealand. Weak domestic data in Australia also played a role in currency’s weakness.
The AUD/USD settled at .7512, down 0.0051 or -0.67% and the NZD/USD finished the session at .6830, down 0.0050 or -0.72%.
The Australian Dollar plunged to its lowest level since June after a big miss on the trade surplus. The news highlighted the economy’s vulnerability to lower iron ore prices.
According to figures released on Thursday, the trade surplus for October came in at $105 million, narrowing month-on-month from a revised $1.6 billion surplus recorded in September. Economists were looking for a surplus of about $1.4 billion.
The internals of the report showed that the key weakness in the October trade report was the health of export earnings, which fell by $903 million, or 2.8 percent, most of which is attributed to the slump in iron ore prices and lower volumes of coal exports upon the tightening of environmental controls in China. It was the largest drop in exports since April.
Earlier in the week, data showed retail sales rebounded 0.5 percent in October but third-quarter economic growth came in at a slightly softer than expected 0.6 percent as consumption disappointed and business investment firmed.
On Thursday, the AUD/USD took out the June 14 bottom at .7532. Additionally, it crossed to the weak side of a major retracement level at .7527, putting the Forex pair in an extremely bearish position. If the downside momentum continues then we could see an eventual test of the June 2 bottom at .7372.
The New Zealand Dollar is being dragged down by the weaker Australian Dollar.
Forecast
Looking ahead to Friday, traders may temporarily shift their focus on the U.S. Non-Farm Payrolls report. Economists are expecting the headline number to come in at 198,000. The unemployment rate is expected to stay at 4.1% and Average Hourly Earnings are forecast to rise 0.3%.
Traders will also be watching for progress on tax reform legislation.
This article was originally posted on FX Empire
