- Australian currency positive overall during tumultuous week – US weakness allowed commodity currency uptrend
- Australia’s home sales improved marginally – Positive movement for manufacturing index
- New Zealand Dollar influenced by milk prices – Confidence in business jumped notably
- Australian election taking place today – Last recorded polls leave outcome too close to call
On the day of the Australian election, the ‘Aussie’ has been trending in a tight range against the New Zealand Dollar due to the tension that has gradually built up over the months before voting day itself.
New Zealand has been devoid of notable ecostats recently, which has instead left the cost of milk as a determining factor on the value of the ‘Kiwi’.
Australian Economic News: Opportunistic AUD Investors took Advantage of US Instability Last Week
The Australian Dollar, for the most part, found itself in consistently high demand over the previous week, with the greatest contender being its antipodean neighbour the New Zealand Dollar.
One of the major sources of support was actually the US where, in the wake of the ‘Brexit’ decision on June 24th, Fed policymaker Jerome Powell warned that even before the vote, the odds of a US interest rate had been slim. This had the effect of granting a great deal of breathing room and therefore confidence to investors in commodity currencies such as the Australian and New Zealand Dollars.
Domestic data out of Australia over the previous week has consisted of the new homes sales data for May, which moved closer to a positive figure, while the AIG manufacturing index for June also rose positively.
Scarcity of New Zealand Data Last Week Saw New Zealand Dollar React to Commodities
The ‘Kiwi’ was aided last week by the same factor as the Australian Dollar – the deterioration of confidence in the US’s near-term economic prospects.
In addition to this, the New Zealand Dollar has also been granted support by the price of milk, which has gradually been rising over the course of the week after the EU Referendum took place.
Direct domestic data for New Zealand has been extremely thin on the ground; building permits in May fell on the month from 6.8% to -0.9% while at the end of the week, the ANZ business confidence printing for June rose considerably from 11.3 to 20.2.
Future AUD, NZD Forecast: Australian Election Outcome due Tomorrow, RBA Decision Tuesday
Without a doubt, the greatest impact on the pairing’s movement in the near-term will come from the outcome of Australia’s election, the result of which is due tomorrow.
It remains a point of uncertainty how the ‘Aussie’ will be influenced by the outcome; while current PM Malcolm Turnbull does represent the previously dominant Coalition, investors may take heart if a new contender comes to the plate in the form of Labor Leader Bill Shorten.
Away from this uncertainty, next week will see the announcement of the Reserve Bank of Australia (RBA) interest rate decision on Tuesday, which is expected to result in a rate freeze at 1.75%, while from New Zealand Monday will merely bring the NZIER business confidence printing for Q2, which previously came in at 2%.
Recent AUD, NZD Exchange Rates
The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate has been trending in the region of 1.0430 and the New Zealand Dollar to Australian Dollar (NZD/AUD) exchange rate has been trending in the region of 0.9592 recently.