Today’s trading session has seen the Australian Dollar (AUD) make a minimal rise against the New Zealand Dollar (NZD).
This still leaves the AUD/NZD exchange rate near its best level since January this year, but doesn’t represent a major advance in the pairing.
There has been negative news out of Australia and New Zealand today, which has left the AUD (slightly) more in demand.
Reserve Bank of Australia (RBA) Governor Philip Lowe warned about the effects of a Chinese economic downturn, saying:
‘Among the largest economic risks that Australia faces is something going wrong in China.
‘Perhaps the single biggest risk to the Chinese economy at the moment lies in the financial sector and the big run-up in debt there over the past decade.’
On the other side, the New Zealand Dollar has been weakened by an economic assessment from Westpac Chief Economist Dominick Stephens:
‘At seven years old, New Zealand’s economic expansion is now entering its “mature” phase.
‘Two years ago the economy was really in its prime, but now the economic cycle is over the hill.’
(Last updated 24th May, 2018)
The Australian Dollar (AUD) has continued to trade in a narrow range against the New Zealand Dollar (NZD) today, following news about Chinese trade.
Although the AUD appreciated this week when the US negotiated a trading ‘truce’ with China, there have been signs that Australia could face its own difficulties.
The state-run Global Times newspaper has made a stinging critique of trade between the two nations, with an editorial saying:
‘It is necessary for China to leave Australia hanging for a while, instead of being too quick to bury the hatchet whenever Canberra tries to put a smile on its face.
‘[It is time to] make Australia pay for its arrogant attitudes it has revealed toward China over the past two years.’
This risks escalating into China purchasing fewer goods from Australia, which could have a significant negative effect on the Australian economy.
(First published 23rd May, 2018)
Slowing Australian Manufacturing Output could Trigger AUD/NZD Exchange Rate Decline
This will be a measure of national manufacturing output, which will come out on 1st June.
The reading is predicted to show a slight slowdown in the national manufacturing sector, with a decline from 58.3 points in April to May’s new low of 57.1.
Although this would be a minor dip, it could still unsettle Australian Dollar traders and lead to a deterioration in the AUD/NZD exchange rate on the day.
Accelerating AU GDP Growth could Push AUD/NZD Exchange Rate Higher
Skipping ahead to June, another upcoming data release that could influence the Australian Dollar will be GDP growth rate stats for Q1 2018, out on 6th June.
Current estimates are for growth in the level of economic activity at the start of 2018, with higher figures predicted for both the quarterly and annual readings.
In the former case, an increase from 0.4% to 0.6% is expected, while an annual rise from 2.4% to 2.5% is also forecast.
Reserve Bank of Australia (RBA) forecasts are for GDP growth to hit 3.25% by December, so if the annual reading rises sharply then an AUD rally could occur.
Higher GDP suggests that the Australian economy as a whole is in a healthy condition, so such results could trigger clear AUD/NZD exchange rate gains.
NZD/AUD Exchange Rate Outlook: Can New Zealand Dollar Rise on Forecast-Beating Trade Balance Boom?
There is a chance for the New Zealand Dollar (NZD) to break out of its current flat trading against the Australian Dollar (AUD) in the near-future, when trading data comes out.
Covering the national trade balance in April, tonight’s reading is predicted to show a shift from the previous deficit of NZ$-86m to a new surplus of NZ$200m
Moving from the deficit to surplus range could cause a surge in confidence among NZD traders, resulting in a clear New Zealand Dollar exchange rate rise.
Chance of New Zealand Dollar to Australian Dollar (NZD/AUD) Exchange Rate Advance on RBNZ Report
Looking further ahead, the NZD/AUD exchange rate could also be affected in the future by the Reserve Bank of New Zealand (RBNZ) financial stability report on Tuesday.
This will serve as a snapshot of New Zealand’s economic status and could signpost potential monetary policy tightening in the coming months.
In brief, if it looks like RBNZ policymakers believe that there will be better economic conditions across the country in the coming months then the NZD could rally.