The Australian Dollar New Zealand Dollar (AUD NZD) exchange rate continued sliding yesterday as Chinese commodity futures went into freefall after weeks of gains.
Falling Commodity Prices Weigh on Australian Dollar New Zealand Dollar (AUD NZD)
The Australian Dollar felt the squeeze on Wednesday as many commodity futures collapsed, only being stopped from falling further due to market rules preventing further losses in a single session.
The sudden reversal was caused by tighter restrictions being placed on traders as regulators attempt to reduce the rampant speculation that led to the recent rise.
This caused prices of Australia’s key export, iron ore to plummet by 4.4% to reach $77.30 a tonne, dropping from a high of over $80 at the beginning of the week.
Australian Dollar (AUD) Pressured by Dramatic Drop in Building Approvals
The ‘Aussie’ also was also pressured by the latest Australian Building Approval data, which fell from -9.3% to -12.6% in October after markets had predicted that new permits would rally to 2.0%.
There are predictions that this could be the start of a prolonged decline in the Australian housing market as David de Garis, senior economist at the National Australia Bank, explained;
‘It points to real risks that the dwelling activity cycle over the next one to two years will now likely be softer than previously expected.’
AUD NZD Forecast: Retail Sales Data due Friday
The AUD NZD exchange rate could fall further on Friday as markets predict that Australian Retail sales will drop from 0.6% to 0.3% in October.
Looking forward to next week, the New Zealand Dollar may advance further if NZ dairy auction prices continue to trend higher, while the Australian Dollar would likely drop further if the Reserve Bank of Australia (RBA) makes a surprise decision to lower interest rates.
Current Interbank Exchange Rates
At the time of writing the AUD/NZD exchange rate was trending around 1.04 and the NZD/AUD exchange rate was trending around 0.95