The Australian Dollar to New Zealand Dollar exchange rate has seen notable gains this week so far, as New Zealand data has failed to impress and prices of New Zealand’s most lucrative commodity, dairy, have plummeted.
After fluctuations last week and a drop from 1.0990 to around 1.0935, AUD NZD has swiftly recovered its losses since Monday. During Wednesday’s European session, AUD NZD tested the level of 1.10.
Australian Dollar (AUD) Supported by Reserve Bank of Australia (RBA) Optimism
Tuesday saw the publication of the Reserve Bank of Australia’s (RBA) latest meeting minutes report, which ended up more optimistic than investors expected.
While the RBA expressed concerns about subdued price pressures and consumer spending, the bank appeared confident that Australia’s economic growth would continue to improve in the next year.
Australia’s job market, which saw impressive performance over the last year, is expected to continue to perform above expectations in the early quarters of 2018.
Some analysts believe that the RBA’s optimistic tone in the meeting minutes could potentially lay the groundwork for tighter monetary policy to be possible over the next year or so.
Speculation that the bank could be working towards taking a more hawkish stance on monetary policy, as well as recent strong Australian ecostats, have boosted demand for the ‘Aussie’ this week.
New Zealand Dollar (NZD) Weaker on Poor Data and Falling Commodity Prices
The New Zealand Dollar saw a strong performance last week as investors reacted optimistically to the announcement of Adrian Orr as the next Reserve Bank of New Zealand (RBNZ) Governor.
However, this week’s data has disappointed New Zealand Dollar investors and has left the Australian Dollar much more appealing in comparison.
New Zealand’s trade balance and current account results, published during Wednesday’s Asian session, both came in worse than expected.
The November trade deficit was forecast to come in at NZ$-550m, but instead worsened to NZ$-1193m. Q3’s current account figure came in at NZ$-4.68b rather than the predicted NZ$-4.29b.
Analysts at Westpac bank noted that the deeper deficit was due to an unexpected rise in imports, though exports were also better-than-expected in November.
On top of domestic news, the New Zealand Dollar was weighed on by the latest Global Dairy Trade (GDT) auction.
Prices of dairy, New Zealand’s most lucrative commodity, slumped -3.9% in the second December auction amid a surge in supplies, causing prices to sink to their worst levels since October 2016.
AUD NZD Exchange Rate Forecast: New Zealand Growth Stats in Focus
Thursday’s Asian session will see the publication of New Zealand’s Q3 Gross Domestic Product (GDP) results, which is likely to be the final influential report for Australian Dollar to New Zealand Dollar exchange rate traders of 2017.
Analysts predict that New Zealand growth will have slowed from 0.8% to 0.5% quarter-on-quarter, and from 2.5% to 2.3% year-on-year.
If New Zealand growth data beats expectations, the New Zealand Dollar is likely to see stronger demand towards the end of the week. This could cause AUD NZD to shed some of its recent gains.
After that, no notable Australian or New Zealand data will be published until Australia’s November new home sales and private sector credit reports on the 29th.
AUD NZD movement could also be inspired by commodity price news, as well as any notable comments from central banking officials.
AUD NZD Interbank Rate
At the time of writing this article, the Australian Dollar to New Zealand Dollar exchange rate trended in the region of 1.1000. The New Zealand Dollar to Australian Dollar exchange rate traded at around 0.9087.