Is Another Rally in Sight for the AUD and NZD?
August 12th, 2009 Posted in Aussie - Kiwi
After two days of declines versus the U.S Dollar, as global stock markets dropped and commodities prices fell, the AUD and NZD saw some gains today as stock markets resumed their rally. The Australian and New Zealand Dollars were particularly hurt by after a Chinese report showed industrial output rose less than expected, which dampened demand for higher yielding assets. Being heavily reliant on exports, Australia and New Zealand are highly dependent on Chinese demand for the nations’ raw materials.
The Australian and New Zealand dollars have both strengthened more than 6% over the past month against the greenback; benefit from the high demand for commodities, therefore any dampening in demand from China will put great pressure on the two currencies. Furthermore, there is uncertainty in the markets as to the Dollar sentiment, with today’s FOMC statement doing little to provide a direction. Uncertainty on how much the U.S Dollar can firm also puts pressure on the two currencies.
While the AUD and NZD experienced some gains during today’s trading, the mood is likely to stay bearish on the two currencies for the rest of the week. Tomorrow’s RBA Governor Stevens’ Speech, due at 23:30 GMT might help reverse the mood; as this speech will provide insight on current economic conditions and more importantly an outlook on the economy as well as clues interest rate changes. The release of New Zealand’s Retail Sales report at 22:45 GMT might push the NZD to some intra-day gains; however, the report is unlikely to cause lasting change in sentiment.
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Tags: AUD, AUD forecast, AUD trading, Aussie, Australia, Australian Dollar, NZD forecast
