Yahoo Finance AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Boosted by “Dovish Fed”, Strong Jobs Data
The Australian and New Zealand Dollars surged against the U.S. Dollar on Wednesday after the U.S. Federal Reserve raised interest rates as expected, but left its rate outlook for the coming years unchanged.
The AUD/USD settled at .7636, up 0.0079 or +1.04% and the NZD/USD closed at .7023, up 0.0091 or +1.31%.
The rate hike was widely expected, but the dollar came under pressure after the Fed’s monetary policy announcements as the U.S. central bank kept its interest rate projections steady rather than revising them higher.
The Fed raised its benchmark rate by a quarter point to a range of 1.25-1.50 percent on Wednesday. The central bank projected three more rate hikes in both 2018 and 2019, unchanged from its September forecasts. Recently, a few Fed officials had talked about cutting the number of rate hikes to two. Others had speculated the Fed could raise its interest rate projection for next year to four rate hikes.
In other news released before the Fed announcements, the AUD/USD and NZD/USD were boosted after U.S. core consumer price data showed slowing inflation, raising concerns the Fed will be less able to execute multiple rate increases next year.
The Labor Department said on Wednesday its Consumer Price Index increased 0.4 percent last month after edging up 0.1 percent in October. That raised the year-on-year increase in the CPI back to 2.2 percent from 2.0 percent in October. The increase was in line with economists’ forecasts.
Core CPI advanced 0.2 percent in October. As a result, the annual increase in the core CPI slowed to 1.7 percent in November from 1.8 percent in October.
Forecast
Upside momentum is on the side of the Australian and New Zealand Dollars early Thursday. Short-sellers are scrambling to take profits after a prolonged decline and covering their positions aggressively. This strong intraday trend could continue throughout the session.
The Australian Dollar is also being supported by strong Australian job figures. The ABS’s latest job numbers blew away the estimates. The data showed that 62,000 new jobs were created in November when only 18,000 were expected. The Australian Unemployment Rate stayed at 5.4%.
The New Zealand Dollar continues to be supported by optimism over the appointment of a new pro-business, possibly hawkish, Reserve Bank Governor.
The sudden shift in the fundamentals, highlighted by the “dovish” Fed caught many investors by surprise. This likely means the short-covering rallies in the Aussie and Kiwi will continue until the weakest shorts are taken out of the market.
This article was originally posted on FX Empire
More From FXEMPIRE:
Natural Gas Price Fundamental Daily Forecast – Daily Reversal Up Could Be Signaling Return of Buyers
EUR/USD Mid-Session Technical Analysis for December 14, 2017
Daily Market Forecast, December 14, 2017 – EUR/USD, Gold, Crude Oil, USD/JPY, GBP/USD
Price of Gold Fundamental Daily Forecast – “Dovish” Fed Fuels Strong Short-covering Rally
