Rising Business Sentiment Fails to Support AUD/NZD
The Australian Dollar New Zealand Dollar (AUD/NZD) exchange rate stumbled late on Tuesday despite an uptick in Australian business confidence.
At the time of writing AUD/NZD has fallen around 0.3%, with the pairing having relinquished nearly all of its early gains this week.
Australian Dollar (AUD) Falls Despite Rise in Business Confidence
The Australian Dollar initially rose against the New Zealand Dollar on Tuesday on the back of better than expected Business Confidence figures.
According to data published by National Australia Bank (NAB), the domestic sentiment index climbed from 10 to 12 in January, indicating that businesses are becoming increasingly optimistic in their outlook.
This was the highest reading since April last year, with firms reporting that business conditions were elevated, by strong sales and high profits.
Analysts believe this will translate into strong employment figures over the coming months, as businesses become more confident in investing.
Daniel Gradwell, Senior Economist at ANZ Bank, said;
‘These indicators bode well for the labour market, suggesting that we should see further strong employment outcomes and make further inroads into the unemployment rate, through at least the first half of 2018.’
However not all sectors were quite so upbeat, with retailers remaining pessimistic due to recent slumps in sales.
New Zealand Dollar (NZD) Rises on Inflation Speculation
Meanwhile the New Zealand Dollar was able to strike back by the start of the European session on Tuesday however as markets speculate ahead of tomorrow’s inflation expectation figures.
The Reserve Bank of New Zealand (RBNZ) will publish its latest business inflation expectations on Wednesday and some analysts are forecasting that country’s better than expected GDP figures could lead to higher inflation expectations.
AUD/NZD Forecast: Australian Consumer Confidence to also Tick Higher?
Looking ahead the AUD/NZD exchange rate may rally on Wednesday with the publication of Australia’s latest consumer confidence data.
Given Australia’s recent impressive employment figures some analysts are forecasting that household sentiment will have held close to the four-year high struck in January.
Meanwhile outside of tomorrow’s inflation survey its set to a quiet week for the New Zealand Dollar in terms of economic data, likely leading movement in the ‘Kiwi’ to be driven by external factors such as commodity prices and the strength of the US Dollar (USD).