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AUD/USD and NZD/USD Fundamental Daily Forecast – Capex Data Pressures Aussie, Business Confidence Rebound Supports Kiwi

James Hyerczyk

The Australian and New Zealand Dollars are edging lower on Friday, but for the most part, are trading rangebound for the week. The lack of progress on trade talks between the United States and China and new concerns over the chances of a trade deal before the end of the year are likely limiting gains.

Trading volume has been extremely low this week due to Thursday’s U.S. holiday with most major players sitting on the sidelines. Traditionally, the Friday after Thanksgiving is also a below-average volume trading session, so I wouldn’t place much confidence in today’s price action.

At 05:19 GMT, the AUD/USD is at .6762, down 0.0008 or -0.11%. The NZD/USD is at .6417, down 0.0002 or -0.03%.

Australian Economic News

Private capital expenditure in Australia was down a seasonally adjusted 0.2 percent on quarter in the third quarter of 2019, the Australian Bureau of Statistics said on Thursday – worth A$29.413 billion.

That missed expectations for a flat reading following the 0.6 percent drop in the three months prior. On a year basis, capex sank 1.3 percent.

Capex for building and structures rose 2.7 percent on quarter and fell 0.3 percent on year to A$15.853 billion, while capex for equipment, plant and machinery sank 3.5 percent on quarter and 2.4 percent on year to A$13.560 billion.

New Zealand Economic News

Business confidence rebounded in November and “it appears the vibe is changing”, says ANZ chief economist Sharon Zollner.

The latest ANZ Business Outlook Survey is much stronger across the board, offering further signs that the current economic slowdown may be reaching its trough.

Headline business confidence jumped 16 points to a net 26 percent of respondents reporting that they expect general business conditions to deteriorate in the year ahead.

Firms’ expectations for their own activity over the year ahead – considered a better economic indicator than topline confidence – rose 17 points to +13.

“The improvement in the ANZ Business Outlook survey this month was broad and consistent,” Zollner says.

“The significant easing in both interest rates and the exchange rate clearly working its way through the economy, and the remarkable resilience of New Zealand’s commodity prices is providing an invaluable buffer to the world’s woes.”

“It is important to note that the activity indicators across the survey remain subdued,” Zollner says.

“Headwinds for business persist:  credit availability, capacity constraints, elevated costs, uncertainty, vigorous competition, high household debt, and the awkward fact that our biggest trading partners appear to be in a spot of macroeconomic bother.”

“But as we have long said, there is no reason for the New Zealand economy to go into recession as things stand.”

“We (ANZ) continue to expect growth in the New Zealand economy to trough shortly and increase – albeit gradually – from here,” Zollner says.

“Growth bottoming out around 2 percent would be a pretty good outcome. Firms have clearly been deeply concerned about the outlook, not without cause, and this has dampened investment and employment this year.”

“But it appears that the vibe is changing to ‘getting on with it’. Good stuff.”

This article was originally posted on FX Empire

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