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Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate Forecast to Soften on Market Sentiment

Australian Dollar Currency Forecast

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate declined by around -0.18% on Thursday afternoon.

With oil prices hovering around $43 a barrel, market sentiment dampened significantly. This saw the high-yielding ‘Aussie’ (AUD) decline amid cooling demand. The US Dollar surge is also weighing on the risk-correlated asset, although the declination was somewhat slowed thanks to improving gold prices.

The New Zealand Dollar also softened as a result of damp market sentiment, which has overshadowed positive growth figures. Additional declination can be attributed to low dairy prices amid strong output from New Zealand and the US.

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate is currently trending in the region of 1.0346.

Australian Dollar (AUD) Exchange Rate Trending Lower on Bearish Crude

With crude oil prices resolutely staying below $45 a barrel amid oversupply, general trader risk appetite has cooled significantly. Prices rebounded slightly after the Federal Open Market Committee (FOMC) held the cash rate. However, many futures traders forecast additional declination as US stockpiles reach capacity with little space left to accommodate such extensive output.

‘There is just too much crude in the market,’ said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ‘Inventories will continue to go up for at least four to six weeks. We are going to test $40 pretty soon.’

Australian economic data also produced some disappointing results which weighed on demand for the South Pacific asset. RBA FX Government Transactions declined from -325 million to -434 million in February. RBA FX Other Transactions dropped from 56 million to 33 million, but regular RBA FX Transactions did improve from 296 million to 109 million.

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate has fallen to a low of 1.0337 today.

New Zealand Dollar (NZD) Exchange Rate Softens despite Positive Growth

New Zealand’s fourth-quarter Gross Domestic Product improved to 3.5% on the year, eclipsing the median market forecast growth of 3.4%. The quarterly GDP equalled the median market forecast of 0.8% economic growth in the fourth-quarter.

However, the data had minimal impact on ‘Kiwi’ (NZD) movement with market sentiment significantly dampened amid low oil prices and geopolitical issues in Greece. Further declination is as a result of low dairy prices as US and New Zealand’s output continues to outpace demand. Demand for dairy, particularly in China, has slowed ever since eco-terrorists threatened to poison infant formula milk in the hopes of preventing the use of agricultural poisons on pests.

‘Since then, New Zealand’s export woes have only increased’ with the scare over environmental activists tainting infant formula with 1080 in protest at the use of the pesticide. ‘Although officials have stepped up security and inspections all along the supply chain, the threat is likely to weigh on demand for milk powder from New Zealand, particularly in China,’ the US-based Milk Producers council said.

Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate Forecast to Fluctuate

With data pertaining to New Zealand due for publication late on Thursday evening, there is the potential for the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate to fluctuate. Friday ought to see an extension of the AUD/NZD fluctuations with RBA Governor Glenn Stevens due to make a speech and with several New Zealand data publications due.

The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate advanced to a high of 1.0374 today.