Australian Dollar to New Zealand Dollar Exchange Rate Rebounds on Australian Retail Report
While both the Australian Dollar (AUD) and New Zealand Dollar (NZD) are more volatile against rivals on global trade jitters, the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate rebounded from its worst levels thanks to some stronger Australian retail stats.
Since opening this week at the level of 1.0415, AUD/NZD has been volatile and has fluctuated due to central bank speculation and stronger data.
The Australian Dollar has risen as much of this week’s Australian data has beaten expectations, but the New Zealand Dollar has also been rising. Investors are firming in the currencies ahead of next week’s Reserve Bank of New Zealand (RBNZ) policy decision.
Overnight, AUD/NZD rebounded from a four month low of 1.0363 and the pair currently trends closer to its opening levels again.
Australian Dollar (AUD) Exchange Rates Firm Ahead of Reserve Bank of Australia on Retail Data
The Australian Dollar has had a volatile week, with rising expectations for further Reserve Bank of Australia (RBA) interest rate cuts in the coming months keeping the currency under pressure.
Still, while uncertainty for the tone the RBA will take in the coming months is limiting AUD demand, much of the week’s most influential Australian data has beaten expectations and this is keeping AUD from falling further.
Australia’s Q2 inflation rate report beat expectations on Wednesday, and the nation’s July manufacturing PMI edged higher on Thursday.
This morning’s June retail sales stats rounded off a good week for Australian data. Retail sales were expected to rise from 0.1% to 0.3% but instead climbed to 0.4%.
It marked the fastest retail growth in four months, since February.
However, the Australian Dollar’s gains were limited as analysts expressed concerns some aspects of the figures being close to recessionary levels. According to Matthew Hassan from Westpac:
‘The most eye-catching figure is the annual growth rate in retail volumes — at just 0.2 per cent, growth over the last 12 months has been weaker than in the GFC and the weakest since the early-90s recession,’
New Zealand Dollar (NZD) Exchange Rates Influenced by Trade Developments
As the Australian Dollar is more strongly influenced by trade uncertainty and US-China trade tensions than the New Zealand Dollar, much of the New Zealand Dollar’s recent movement against the New Zealand Dollar has been driven by that.
AUD/NZD fell on Thursday evening, as US President Donald Trump announced plans for fresh tariffs on US imports of Chinese goods, seemingly putting an end to the trade truce between the nations.
While the Australian Dollar recovered overnight due to stronger Australian retail sales data, AUD/NZD remains under pressure today as US-China trade tensions continue to impact the ‘Aussie’ more than the ‘Kiwi’.
Investors are also hesitant to sell the New Zealand Dollar too much ahead of next week’s anticipated Reserve Bank of New Zealand (RBNZ) decision, when the bank is expected to cut New Zealand interest rates.
Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate Outlook Awaits Central Bank News
Due to worsening US-China trade tensions, the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate has been volatile over the past week.
Rising expectations for dovishness from the Reserve Bank of Australia (RBA) kept pressure on AUD despite strong Australian data.
Meanwhile, a Reserve Bank of New Zealand (RBNZ) interest rate cut is already priced in for next week, so investors are hesitant to sell the New Zealand Dollar too much.
As a result, AUD/NZD investors are highly anticipating next week’s session, when both the RBA and RBNZ will hold their August policy decisions.
If the RBA takes a more dovish tone in its decision on Tuesday, Australian interest rate cut bets could rise and AUD/NZD could fall even lower.
However, a more optimistic than expected tone would make an AUD/NZD recovery easier.
The Reserve Bank of New Zealand will likely cut New Zealand interest rates in its own decision on Wednesday.
If the bank is even more dovish about its outlook than expected, this would also boost the chances of an Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate recovery.